Drop in retail turnover shows cautious consumers not spending

RETAIL spending has slowed for a second straight month as consumers tighten their purse strings amid low wages growth.

Turnover fell 0.1 per cent to $25.63 billion in March, according to Australian Bureau of Statistics figures released yesterday. The fall missed market expectations for a 0.3 per cent rise and followed February’s 0.2 per cent drop.

“It does indicate a pretty cautious Australian consumer,” AMP Capital economist Shane Oliver said.

“The figures are consistent with the weakness we have seen in wages growth and the wearing off from the boost in interest rate cuts.”

While the Reserve Bank has kept the cash rate steady at 1.5 per cent since August, the banks have lifted interest rates in recent months to offset rising borrowing costs.

Dr Oliver said the retail figures followed soft international trade figures for the three months to March that did not bode well for the nation’s economic growth.

“It all paints a soft picture for March quarter GDP (gross domestic product) growth,” he said. “We will need to see decent growth in business investment, public spending and housing construction to see the quarter hold up.”

The data showed cafe, restaurant and fast food sales fell 0.5 per cent in March, food retailing also dropped 0.5 per cent, department stores’ sales declined 0.6 per cent and household goods slipped 0.1 per cent.

These falls were partially offset by rises of 1.1 per cent in other retailing and 0.4 per cent in clothing, footwear and accessories.