Sales up in retail but fear persists
OCTOBER retail spending has beaten market expectations, with the 0.3 per cent monthly rise driven by cash dropped on clothing, footwear and personal accessories, as well as a rise for department stores.
But economists remain underwhelmed after disappointing September quarter GDP data on Wednesday, citing an uneven spread of spending and housing marketaffected NSW figures as cause for concern.
Seasonally adjusted retail spending for October was $26.99 billion, up from September’s revised 0.1 per cent lift to $26.89 billion, according to Australian Bureau of Statistics data released yesterday.
The result was slightly better than the expected 0.2 per cent rise, but the Australian dollar dipped and dived on reactions to the data, reaching US72.50¢ at 11.40am.
“While sales growth is still not strong, it’s looking a touch better than it did mid year, annual growth having lifted from 2.9 per cent in June to 3.5 per cent in October,” Westpac senior economist Matthew Hassan said.
“The detail looks to be a little more uneven with a strong rise for clothing and a solid gain for household goods but mixed results for ‘small ticket’ discretionary store types.”
The retail figures follow Wednesday’s flatter-than-expected GDP data, where falling house prices, tighter lending standards and resolutely sluggish wages were credited for a weaker-than-expected 0.3 per cent economic growth in the September quarter.
Sarah Hunter, chief Australia economist for BIS Oxford Economics, also warned October’s retail rise might not be flowing through to bricks-andmortar stores.
“Online sales now account for almost 6 per cent of turnover, up from 4.7 per cent a year ago,” she said.
“Competition from e-retailers is squeezing margins as well as volume of goods sold in stores, we expect this trend to continue into the medium term.”
There was a 2.6 per cent lift in spending on clothing, footwear and accessories to $2.12 billion, while there was a 0.6 per cent rise in household goods spending to $4.6 billion, a 0.2 per cent jump for food retailing to $10.98 billion, and a 0.4 per cent lift for department stores to $1.57 billion.
However, spending in cafes, restaurants and on takeaway food fell 0.9 per cent to $3.81 billion and newspaper and book retailing was down 2.8 per cent to $236 million.
All states except NSW saw a retail lift in October. NSW still accounted for the bulk of the nation’s October retail spend with $8.62 billion, followed by Victoria with $7.09 billion, and Queensland with $5.37 billion. JAMES HALL AGRICULTURAL chemical supplier Nufarm continues to lean on its overseas businesses as the eastern Australia drought dries out local income, but managing director Greg Hunt insists geographic diversification has the company on track for full-year growth.
Mr Hunt told shareholders at the annual general meeting yesterday the 2018 Australian winter crop was expected to fall 20 per cent below the twodecade average, with eastern states’ forecast alone about 40 per cent lower.
But the company said it had grown revenues and underlying profit in North America and South America, while its newly acquired product portfolios in Europe were performing well despite also being hampered by dry conditions.
Nufarm shares spiked at yesterday’s open but finished the day down 0.97 per cent to $6.12, down from an eight-year high of $9.74.
“We are confident the changes and improvements we have made to the business and the growth platforms we have developed will continue to generate increased value for shareholders,” Mr Hunt said.
Assuming average seasonal conditions, Mr Hunt expected 2019 underlying earnings to be in a range of $500 million to $530 million, well up on the $386 million generated in 2018.
LOOKING AHEAD: Greg Hunt, Nufarm CEO, says the company remains upbeat despite winter crops being forecast to fall up to 40 per cent for the eastern states.