Over the past couple of days, I noticed a correlation in the trends between housing credit growth and retail sales growth that is worth a mention. Of course, at MB, we’ve long established the link between house prices and retail sales, but here is a pretty clear illustration of the link between mortgage creation and sales.
This stands as a stark warning to anyone expecting a bounce in retail sales so long as disleveraging continues. Let alone actual deleveraging. It also explains why surfwear clothing brand Billabong, electronic retailers JB Hi-Fi and Jerry Harvey are all reporting ”recession-like” trading conditions and why Myer and David Jones have already issued profit warnings ahead of their reporting this month.
