Sales up in re­tail but fear per­sists

The Cairns Post - - BUSINESS - ALEX DRUCE

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.

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