Troubling signs for retail in April
National Australia Bank’s monthly cashless retail sales index has recorded a 0.6 per cent month-on-month (m/m) decline in April after increasing by 1.8 per cent in March.
All sub-sectors bar department stores and cafes, restaurants and takeaway food services fell backwards m/m in April, with food and clothing and footwear posting the weakest result.
National Australia Bank chief economist Alan Oster said it was the first time the index had recorded a negative month-on-month result this year.
“While the monthly data are volatile, our latest Monthly Business Survey also showed retail business conditions turning negative in April for the first time this year, further suggesting that the retail sector is losing momentum again,” he said.
NAB has forecast ABS retail turnover to fall by 0.2 per cent in April, which would sink the sector into negatives after recording a flat result in March.
Year-on-year (y/y) data was more positive, with the index showing a 9.3 per cent increase in April. NAB warned that this was distorted somewhat by iPhone X and Black Friday sales in late 2017.
Positive signs for wage growth
The less than positive figures come just a day after the release of RBA minutes which outlined governor Phillip Lowe’s ongoing concern that low wage growth is constraining consumption, holding back inflation.
The wage price index increased by 0.5 per cent in the first quarter, ABS data released on Wednesday showed.
The result was slightly below market expectations of a 0.6 per cent quarter-on-quarter (q/q) increase but a consensus is building among economists that gradual wage growth is likely to occur in 2018 as the labour market continues to tighten.
“We remain confident that wage growth has troughed and is likely to improve gradually through this year and next,” ANZ economist Felicity Emmett said.
The wage price index increased by 2.1 per cent y/y in the first quarter, the same as Q417 and in line with market expectations.
Both public and private sector wages rose y/y although public sector gains (up 2.3 per cent) outstripped private sector increases (1.9 per cent).
The RBA said in its meeting minutes from April that there have been signs of employers finding it harder to source workers, although this has yet to translate to any significant increase in wages.
The retail sector is waiting with bated breath for an easing of difficult macroeconomic conditions after several years of anaemic wage growth.