Jobs growth and savings support Q4 retail spending but wage growth needed to sustain or improve the ‘steady’ figures
RETAIL turnover continues to expand at a steady rate heading into the final quarter of 2018, despite difficult financial conditions for households, as consumers draw down on savings to support spending activity, new figures show.
The figures are published in the latest edition of the quarterly CHEP Retail Index.
The index uses transactional data from CHEP pallet movements to provide a lead indicator of Australian Bureau of Statistics retail trade data, predicts year-on-year retail sales growth to continue in the December quarter.
It shows households can only continue to draw on savings to support spending activity for so long, with the outlook for spending contingent on stronger wage growth.
The labour market is tightening, as business continues to feel confident enough about conditions to add to their permanent staffing levels and this is supporting consumer confidence.
A higher trend in pallet movements suggests retailers’ are confident about conditions heading into the Christmas period and expect spending to strengthen heading into the last quarter of 2018.
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Index: Key figures
- Turnover of $27.1billion in November 2018, with year-on-year growth for the month of November increasing to 3.6%
- Quarterly basis, 3.4% year-on-year growth for the September quarter and increasing to 3.9% for the December quarter.
Providing commentary on the index, David Rumbens, partner at Deloitte Access Economics, says “buoyant retail conditions in 2018 have been supported by a rundown of household savings, along with solid employment growth.
“Retailers are showing some confidence that this rate of spending will be maintained through the crucial Christmas period.”
The CHEP Retail Index analysis and commentary is provided by Deloitte. It is recognised as a reliable lead indicator of Australian Bureau of Statistics retail trade data.
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