That’s because the run-up in sales activity in pre‑Christmas trading of 2018 is below both 2017 sales, and the longer-run average: the cumulative dollar value of spending from the start of November to early January is down 3.7 per cent, as of ten weeks into the peak trading period.
“What seems to be happening here is we’re shunting some of that pre-christmas spending into November,” Mr Blythe said. “The retail component of overall consumer spending is an important part of the story, but there is a level of saturation people have reached with spending on goods. A lot of spending activity is on that non-retail component, or the services side of the story.”
Mr Blythe said there was nothing in the retail survey to deviate from his view that consumption is challenged.
“It is weak income growth, it is the job security concerns that people still have despite a strong labour market. By curing a financial stability risk we’ve created a macro-economic risk,” in transferring interest-only borrowers to principal-and-interest loans. “Falling house prices is another part of that story as well.
“Household wealth is probably falling at the moment as well, that balance sheet measure is moving against the consumer side.”
Kathmandu downgraded earnings last week following a decline in same-store sales, but the womenswear retailer Noni B on Thursday issued an upbeat update on better than expected trading.
Capital Economics speculated that rainy weather in Sydney and Melbourne was behind a 0.1 per cent decline in spending at cafes, restaurants and takeaway outlets. Reflecting the promotional activity during the month, household goods were a standout, up 1.2 per cent, led by the electronics category, which was up 3.3 per cent. Clothing, footwear and accessories growth was 1.5 per cent, evenly distributed among sub-sectors.
Lower petrol prices would have helped shoppers in November.
NAB stood by its concerns that December is on track for a weak result, which will drag down the fourth quarter and add to the case for a downgrade to the official growth forecast by the Reserve Bank in February.
from A Viral Update http://bit.ly/2FrOFFw
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