Dr Shane Oliver, Head of Investment Strategy and Chief Economist at AMP, discusses retail sales and construction approvals.
Australian retail sales posted a surprising increase in May, up 0. 6% month-on-month, while economists had expected an increase of just 0. 3%. However, this has happened against a backdrop of limited customer spending in recent months and families taking advantage. of year-end refunds. Retail volumes continued to contract year after year, and this is the most significant “retail recession” seen in the history of the series, either in terms of duration or magnitude.
Source: ABS, AMP
Monthly retail sales awareness has been very noisy due to adjustments in the timing of promotions. It is more useful to take a look at long-term trends to assess the fitness of Australian consumers. According to several indicators, the trend in the retail industry remains weak:
Source: ABS, amp
The strength of the monthly figure was focused on some discretionary items, adding clothing (+1. 6% mom) and furniture (3. 1% mom), thanks to EOFY promotions, in addition to alcohol sales (+6. 1% month-on-month, which is a (reversal compared to the April drop).
Source: ABS, AMP
Current construction also surprises on the upside, growing by 5. 5% compared to May (compared to a forecast increase in construction of 1. 6%), thanks to the increase in the construction of single-family homes (-3. 2% month-on-month) . ) and in specific apartments (-19. 7% month-on-month), which are volatile.
Source: ABS, amp
Today’s knowledge set is another bullish marvel after a larger-than-expected rise in the May CPI indicator last week. This is in addition to the threat of a further increase by the Reserve Bank to further curb demand and, therefore, inflation. However, in our view, the overall scenario has not been significantly repositioned. Household budgets continue to suffer from peak inflation and, in particular, high housing and borrowing costs. As a result, spending volumes continue to contract, customers continue to seek promotions, and customer confidence revealed through surveys remains negative. While the RBA is likely to talk about the upside of more rate hikes at the upcoming meeting, it will most likely put more emphasis on upcoming releases on inflation and retail data, which will provide a complete picture of the second quarter.
Ends
Important note: Although every care has been taken in the preparation of this document, neither National Mutual Funds Management Ltd (ABN 32 006 787 720, AFSL 234652) (NMFM), AMP Limited ABN 49 079 354 519 nor any another member of the AMP. Group (AMP) does not represent or guarantee the accuracy or completeness of anything contained therein, including, but not limited to, any predictions. Past functionality is not a reliable indicator of long-term functionality. This material has been prepared with the objective of offering general information, without taking into account the specific objectives, monetary situation or wishes of any investor. An investor should, before making any investment decision, consider the suitability of the data contained herein and seek professional advice, taking into account his or her objectives, monetary situation and wishes. This document is intended solely for the use of the party to whom it is provided. This curtain is not intended for distribution or use in any jurisdiction where doing so would be contrary to applicable laws, regulations or rules and does not constitute a recommendation, offer, solicitation or invitation to invest.
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