Retail food sales and manufacturing growth strengthening in Australia

Posted by AFN Staff Writers on 10th February 2014
Retail food sales and manufacturing growth strengthening in Australia

Year-on-year growth in retail food sales is at its strongest since early 2010, according to a report from food manufacturing industry body the Australian Food and Grocery Council (AFGC) and packaging and distribution company CHEP.

Meanwhile, the Australian Industry Group Australian Performance of Manufacturing Index has shown that food manufacturing bucked the overall trend and recorded growth in January 2014.

Retail growth

The AFGC CHEP Retail Index report, released 30 January 2014, showed that the Index was 4.2 per cent higher in December 2013 compared with December 2012, up from an increase of 1.9 per cent between September 2013 and September 2012. On a quarterly basis, the Index was 4 per cent higher in the December 2013 quarter compared with the December 2012 quarter.

The AFGC said the strengthening rate of growth suggested the Christmas trading period in 013 may have been better than analysts had expected for retailers.

The Index suggested this upswing is likely to sustain through early 2014, forecasting a year-on-year increase of 4.2 per cent for the month of February 2014 and a 4.2 per cent year-on-year increase for the March 2014 quarter.

“The combined effect of low interest rates and improved consumer confidence after the Federal election has seen retailers experience a stronger-than-expected rise in retail sales over the past few months,” said Gary Dawson, AFGC CEO. “Retailers will be hoping that the labour market also strengthens to support a return to a genuinely strong retail environment,” he said.

Recent movements in Australian Bureau of Statistics (ABS) Retail Trade trend data were consistent with this outlook. The latest data showed that year-on-year growth in nominal retail trade picked up to 4.1 per cent over the year to November 2013, taking economists by surprise.

“The strong growth since August 2013 is a welcome change,” said Phillip Austin, CHEP Australia and New Zealand President. “We’re delighted that the retail industry experienced a stronger than forecasted Christmas peak and that the uplift can be expected to continue into the March quarter of 2014,” he said.

“With our network size and scale, CHEP fully supported our retail customers through this upswing, and is well positioned to meet the additional demand for pallets, produce crates and retail display solutions resulting from the increase in retail trade,” Mr Austin said.

The next AFGC CHEP Retail Index will be released in late April 2014.

Food manufacturing grows against overall downward trend

Meanwhile, the Australian Industry Group Australian Performance Manufacturing Index (Australian PMI) has found that the Food, Beverages and Tobacco sector recorded growth (54.0), despite an overall contraction down 0.9 points to 46.7.

“2014 looks to be another challenging year from many Australian manufacturers,” said Innes Willox, Australian Industry Group Chief Executive. “But some encouraging signs are also evident in food and beverages manufacturing and in petroleum and chemical manufacturing, possibly due to the lower Australian dollar over recent months,” he said.