Cold comfort for retailers

Shoppers spend up on clothing as weather turns

CONSUMERS returned to embattled department stores to shop for clothing and shoes in May as the weather turned colder.

Seasonally adjusted retail spending rose 0.4 per cent to $26.674 billion in May, ahead of market expectations of a 0.3 per cent increase.

Department stores recorded the strongest increase in spending, up 3.9 per cent in May, compared with a 0.9 per cent drop in April, according to Australian Bureau of Statistics data.

Clothing, footwear and personal accessories spending was also stronger, up 2.2 per cent in May, compared with a 0.8 per cent fall in the preceding month.

ABS director of quarterly economy-wide surveys Ben James said spending at department stores led the sector’s gains.

“There was also a strong result in clothing, footwear and personal accessories,” Mr James said.

“Both industries were able to rebound after unusually warm weather impacted April sales.”

Food spending rose 0.3 per cent in May, following a similar performance in April. The retail spending figure for April was revised to 0.5 per cent from the initial 0.4 per cent gain reported by the ABS last month.

May sales in South Australia were up 1.1 per cent and Tasmanians spent an extra 1.5 per cent. Western Australia was the only state where sales fell.

The increase brings the growth of overall retail sales for the year to a fairly benign 2.5 per cent.

Westpac’s Matthew Hassan told the ABC that the “May survey detail is not as positive as the headline figure suggests”.

“A lacklustre consumer, competitive pressures and price discounting still look to be clear headwinds for the retail sector,” he said.

“Looking forward, price discounting may ease a touch with the introduction of GST on low value imported goods from July 1, which will affect the pricing and availability of offshore-based online retail competitors.”

However, Mr Hassan said the housing slowdown was likely to have some dampening impact on spending as well.

Capital Economics’ Paul Dales told the ABC the figures suggested households were still coping well with the combination of low income growth and falling house prices.

“Unfortunately, we doubt that will last. And the recent rise in global trade tensions remains a big risk for a small, open economy like Australia.”