Below trend growth to continue
Our forecast points to a solid ABS retail headline figure for November – the strongest result since February this year if it transpires.
This month we continue our podcast series to accompany the NAB Cashless Retail Sales Index. In this short podcast, you’ll get a quick summary of the major drivers of the index this month. Listen now.
Our forecast points to a solid ABS retail headline figure for November – the strongest result since February this year if it transpires. However, there are reasons to doubt this represents a return to strength for the sector. Our Monthly Business Survey has been picking up higher retail prices recently which appear to be an attempt to recapture margin in the face of higher input costs. The much-expanded Black Friday –Cyber Monday retail sales are important because they are a reasonably new, and increasingly important, phenomenon, which means that the ABS’s seasonal adjustment processes may not fully capture them. If this at least partly represents Christmas spending being brought forward, December may have some downside risk.
Ultimately, it remains our view that retail sector fundamentals will continue to underperform. Higher unemployment, sluggish wage growth and elevated debt will keep the brakes on spending growth, interest cuts notwithstanding. Ultimately, more stimulus is needed to fundamentally change this equation.
For more information, please see the NAB Cashless Retail Sales Index November 19
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