Retail spending rises in April

woman shopping 2

April retail turnover has smashed market expectations, posting a 0.4 per cent gain as Australians opened their wallets to eat out.

The figures have catapulted retail back to growth after a flat result in March and bucked ANZ and NAB forecasts of a decline.

But while the sector-wide story was positive, an unseasonably warm start to winter led to declines in several key discretionary categories, tempering market optimism in any sustained spending turnaround.

In annual terms growth ran at 2.6 per cent in April, down on the 3.2 per cent year-on-year (y/y) growth in March, the ABS said.

Cafe’s, restaurants and takeaway food services led the pack, posting a 1.3 per cent increase in April (seasonally adjusted) and 4.86 per cent growth year-on-year (y/y).

Despite moderating housing prices, household goods also managed a strong result, up 0.7 per cent month-on-month (m/m) and by three per cent y/y.

But department stores fell 0.9 per cent heading into winter, down 3.74 per cent y/y; while the clothing, footwear and personal accessories category fell 0.8 per cent, up just two per cent in annual terms.

ANZ Bank senior economist Joanne Masters said the figures were a dose of sunshine for the retail sector, but that weakness in discretionary categories was concerning.

“Despite the better-than-expected outcome, we remain cautious about consumer spending, particularly for discretionary items, given the slowdown in the housing market and high petrol prices,” she said.

Australian Retailers Association (ARA) executive director Russell Zimmerman said April’s year-on-year figures were disappointing, attributing the decline against March on higher petrol prices and declining house prices.

“April’s figures are somewhat poor for the industry, with either flat or declining turnover across several key categories,” Zimmerman said.

Food retailing was up 0.3 per cent in April, growing by 3.45 per cent y/y. The Other retailing category rose 0.9 per cent m/m, up 2.1 per cent in annual terms.

Online retail turnover contributed 5.4 per cent to the total industry in April, a rise from 5.1 per cent last month and up from 3.4 per cent this time last year.

National Retail Association (NRA) chief Dominique Lamb said the warmer start to winter had incentivised Aussies to eat out and avoid winter apparel sales.

““With several department stores and fashion outlets slashing their prices between now and July 1, we are optimistic that sales in this area will pick up markedly in the month ahead,” she said.

The NRA is forecasting clothing, footwear and personal accessories to book $2.06 billion in sales during the end of financial year promotional period in June, up 1.35 per cent y/y.

UPDATED 18:34 AEST

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