Big cash splash ‘barely a trickle’

RETAIL spending continues to underwhelm even as the sector shows green shoots of recovery as interest rates fall and consumers receive government tax offset payments, economists say.

Retail spending rose 0.4 per cent to $27.55 billion in August, according to official figures released yesterday.

It was led by a 1.8 per cent rise in spending on clothing, footwear and personal accessory retailing, and a 1.1 per cent rise for department stores.

But the rise — which followed a flat July — fell short of market expectations for a 0.5 per cent increase.

Economists broadly said they were yet to be convinced stimulus measures had been enough to boost the nation’s flagging economy.

“As it stands, the 0.4 per cent gain suggests the ‘cash splash’ is barely a trickle so far,” Westpac economist Matthew Hassan said.

The Reserve Bank cut the cash rate to a new record low 0.75 per cent on Tuesday after its previous two cuts, in June and July, appeared to yield little for the economy but an increase in property prices.

Mr Hassan said the overall result was a disappointing one and underlying conditions were potentially weaker than previously estimated.

National Australia Bank economist Kaixin Owyong said while the return to growth was welcome, the weakerthan-expected figures suggested considerable headwinds were blowing.

“For the RBA, these data confirm anecdotes from retailers that suggested ongoing softness and suggests further stimulus is required to get consumer spending to lift,” Ms Owyong said.

Further evidence of economic weakness presented itself this week as new car sales declined for an 18th consecutive month.

The number of vehicles sold across Australia last month was 6.9 per cent lower compared with September 2018.