November 0.4%mth, 2.8%yr

Retail sales expanded by 0.4% in November to be 2.8% above the level of a year ago. The annual figure is distorted lower by unfavourable base effects (sales jumped 1.2% last November followed by a sharp 0.5% decline in December).

In trend terms, spending increased by 0.2% to be 3.6% higher than this time last year.

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For retailers, Black Friday is the highlight of the November calendar – a largely on-line event which has increased in popularity over the past couple of years – and acts to bring forward spending from December.

For November 2018, the ABS advise that total online retail trade accounted for 6.6% of total retail turnover, up sharply from 5.9% in October. A similar spike is evident last November (5.5% up from 4.7%) but the impact is less pronounced in earlier years.

In November, spending on household goods and clothing, which likely received a boost from the sales, posted strong gains, +1.2% and 1.5% respectively. However, ‘other retailing’, a diverse segment including an element of on-line sales, actually fell in the month, down 0.1%.

On balance, the ABS seasonal factors may not fully allow for the increased popularity of Black Friday.

More generally, retail spending has been choppy around a subdued trend. Weak wages growth, the housing downturn and drought conditions in NSW and surrounds are key headwinds.

A plus, household incomes have been supported by strong jobs growth, which has outstripped population gains in both 2017 and in 2018, driving the unemployment rate lower, down to 5.1%, a six year low.

Recall that retail spending slowed in Q3, with real sales up only 0.2%, following a chunky 1.0% rise in Q2, to be 2.2% above the level of a year ago.

The consumer mood improved in Q4, with the Westpac-MI Consumer Sentiment index at 104.3 in November after dipping to 100.5 in September in the aftermath of the change of Prime Minister.

For Q4, retail is tracking a little better – to date – but the key December sales remain critically important. If, for argument sake, sales post a gain of 0.2% in the month of December, the value of spending in Q4 will be up by 0.9% – a mild improvement on the +0.6% for Q3.

At the state level, spending in NSW rebounded in the month, up 0.8% but that comes after two sharp falls (-0.7% and -0.6%) and the trend monthly pace remains down, -0.1%.

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