It has been a pleasant news from the retail trading with an unexpected rise of 1 per cent in the month of April 2017, as witnessed in over 2½ years. This is quite impressive given the fall of 0.2 per cent seen in March. The annual growth is also seen to surge from a 4-year low of 2.2 per cent to 3.1 per cent. Quite interestingly, all eight states and territories across the nation saw a rise in retail activity.A significant boost, however, came-in from 2.4 per cent jump in Queensland while NSW and the Australian Capital Territory remained two drags.
The retail spending support was found from an increased spending on liquor retailing (beer, wine and spirits), seen for the first time in last six years. Spending at specialised food retailers (seafood etc.) was also the highest in over three years while non-food or discretionary spending reported for a 0.8 per cent rise in April. Spending at Department stores was up 2.5 per cent. On the other hand, first-quarter capex moved up by 0.3 per cent.
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Spending scenario and outlook (Source: CommSec.com.au)
Business spending was also on the upsurge with new business spending on buildings and equipment rising by 0.3 per cent in the March quarter. However, investment has been down 9.3 per cent over the year. Overall, the outlook for business investment still looks little bleak.
Although it has been an overwhelming retail result, it is important to note that the data is for the month of April that was spread over with Easter, school holidays and the ANZAC day weekend. Further, headwinds in the form of mortgage lending restrictions and higher mortgage interest rates might impact household goods retailing going forward, and this may skew the momentum. Moreover, interest rate is another determinant for the retail momentum. It is thus yet to be ascertained whether the present rise will seed an upward trend or is a short-lived momentum.Meanwhile, Aussie dollar has jumped up almost a quarter of a US cent (US74.55 cents from US74.25 cents), on strong retail data. This has helped some retails stocks move up a notch with JB Hi-Fi surging 0.3 per cent while Myer was up 2.3 per cent.
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