Retail turnover stalled in November, disappointing even the modest expectations of economists and underscoring the need for the interest rate cuts announced late last year.
The unchanged level of sales, after seasonal adjustment, undershot forecasts centred on a rise of about 0.3 per cent.
Compared with a year earlier, turnover was up by 3.1 per cent.
Judging by the latest retail price figures, that would translate into an annual rise in real terms of about one per cent.
There is a lot of consumer spending not covered by the retail survey – petrol, motor vehicles, charges for telephones and utilities, and sales over the internet among other things.
But the numbers from the Australian Bureau of Statistics (ABS) on Monday still appear to confirm that the caution among households evident since the global crisis in 2008 is still with us.
One of the reasons for that is most likely the softness in the construction sector, often a driving force behind retail spending.
Earlier on Monday, the Australia Industry Group/Housing Industry Association (HIA) survey of the construction industry for December revealed ongoing declines in activity, new orders and employment in the sector.
Each measure has now been declining for more than a year and a half.
The pace of decline in construction activity slowed in December, thanks to a marginal increase in the engineering construction sector (transport infrastructure, pipelines, mines, offshore drilling rigs and the like).
But even then the rise in activity in that segment was only marginal and both residential and non-residential building continued to slide.
There was a chink of light through the gloom on Monday, in the form of news from the HIA that new home sales had blipped up by 6.8 per cent (seasonally adjusted) in November, a result the HIA’s chief economist, Harley Dale linked to the interest rate cut announced by the Reserve Bank of Australia (RBA) early that month.
Sill, sales were still recovering from the 11-year low hit in September and, according to Dr Dale, “are running at least 20 per cent below what you could conservatively call healthy”.
In fact, they were 25 per cent below the average of the past decade.
These figures all predate the major part of any positive impact from the rate cut on November and the one that followed in December.
Accordingly, they can be seen both as re-assurance that the cuts were needed and are very unlikely to increase the risk of inflation in the coming year or so.
They also predate the major part of any negative fallout from the crisis in the euro currency area.
Against that background, the figures could be seen as evidence that more cuts are likely to be necessary.
