Retail spending in Australia appears to have been “fairly weak” over Christmas after thrifty locals exploited the Black Friday sales and reined in further excesses amid sluggish wage growth and falling property prices.
National Australia Bank’s cashless retail sales index for December showed electronic purchases rose just 0.9 per cent from November.
That led the bank’s economists to predict a 0.3 per cent decline when the ABS releases its official retail data for the month, which would be the weakest result for a year.
NAB chief economist Alan Oster said that, while the US-born sales events of Black Friday and Cyber Monday were arguably hoovering up some cash traditionally spent in December, there were other factors at play.
“While some Christmas spending was brought forward to November by way of the ever more popular Black Friday and Cyber Monday sales, the reality is that consumers were reluctant to spend over Christmas and that underlying spending is lacklustre, underlined by a number of retailers starting the Boxing Day sales before Christmas itself,” NAB’s report said.
“It appears that there is more to the decline this year than a simple bringing forward of spending to November.”
NAB said its forecast for a negative ABS print is driven by a contraction in four of the six major sectors: household goods, department stores, other retailing and cafes, restaurants and takeaways.
With retail spending so weak, NAB economists have pushed out their estimate for a Reserve Bank rate rise to the second half of 2020.
Some economists, including those at Capital Economics, even expect the RBA to lower the cash rate to a fresh low 1.25 per cent by the end of 2019.