Australian retail remains ‘subdued’

Posted by AFN Staff Writers on 25th July 2012

Australian retail trade saw a moderate improvement in the June 2012 quarter, with an increase of 3.3 per cent in overall activity as measured by the AFGC CHEP Retail Index. However, the Index predicts the upswing in activity will not last.

The index uses CHEP transactional data based on pallet movements and is a lead indicator of Australian Bureau of Statistic (ABS) Retail Trade data.

The figures predict retail trade to be 3.5 per cent higher in June 2012 (with a turnover of $21.3 billion) compared with June 2011.

Growth is expected to slip back to 3.2 per cent for the August month-to-month comparison with 2011, with a predicted retail trade turnover figure of $21.4 billion for August 2012. This is notwithstanding the slight growth trend in nominal retail trade since January 2012.

While the Index predicts growth will pick up in the September 2012 quarter compared with the 2011 September quarter, it will remain at a moderate 3.2 per cent.

The series of Reserve Bank of Australia interest rate cuts since November 2011 and recent Federal Government Family Assistance Package payments may some be factors influencing the uplift in recent spending.

AFGC’s Acting Chief Executive Geoffrey Annison said consumer sentiment remained weak and broad retail conditions were soft.

“Continued flagging economic conditions in Europe and a weakness in house prices and the share-market are weighing on consumer confidence,” Dr Annison said.

“It is also important to note that retail conditions vary dramatically from state to state, with mining states experiencing healthy retail spending growth and states where mining makes a smaller contribution to the economy battling much weaker retail conditions,” he added.

Meanwhile Australian Bureau of Statistics figures show that in Western Australia, nominal retail spending growth has been trending at almost 10 per cent over the past year while Queensland and the Northern Territory have been experiencing growth of 4 to 5 per cent.

On the other hand, retail conditions are much weaker in New South Wales and South Australia, with growth of about 2 per cent over the past year, while being worse in Victoria and Tasmania, where growth was less than 1 per cent over the same period.

CHEP Australia & New Zealand’s President, Phillip Austin, said conditions were stabilising and that the ongoing subdued nature of retail conditions was driving a greater level of collaboration between retailers, suppliers and service providers.

“The data supports a view that recent activity has stabilised and it is now in fact indicating an underlying resilience,” Mr Austin said.

“In recent times we’ve seen an increase in collaborative innovation to continue to achieve efficiency benefits in a low-growth environment,” he added.

The AFGC CHEP Retail Index is a collaborative project between the AFGC and CHEP Australia, powered by Deloitte. CHEP is the global leader in Pallet and Container pooling services.