Retail trade data heightens economic concern
Peak retail industry body, the Australian Retailers Association (ARA), said the retail trade trend estimates released today, which indicated no change for June 2008 and a turnover decrease of 3.9% compared with May 2008, imply continued tough times ahead for Australia’s economy.
Overall, food retail, Australia’s largest retail sector, bucked the trend with a slight increase in turnover. Restaurants and cafés, however, are beginning to lose customers as more Australians start tightening their belts.
According to the ARA’s Executive Director Richard Evans, the retail sector in Australia is a barometer of the economy and if it’s struggling it’s a meaningful sign that conditions will become more difficult for the broader economy.
“The trend estimates show a decrease in turnover trend estimates for department stores (-0.8%), clothing and soft good retailing (-0.6%), recreational good retailing (-0.2%) and hospitality and services (-0.1%). On the other hand food retailing showed an increase of +0.2%, indicating the rise in grocery prices due to increased fuel costs as consumers manage family budgets by eating in,” Mr Evans suggested. “Department stores and clothing retailers continue to struggle, but the hospitality retailers including cafes and restaurants are beginning to experience the drop off in consumer spend as families prefer home cooked meals and workers bring packed lunches rather than heading out to nearby cafes.”