Retail recession hits southern states

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By Leith van Onselen

Earlier today, Houses & Holes’ posted a summary of today’s retail sales figures for the month of December, which registered a seasonally-adjusted -0.2% fall over the month versus an expected 0.3% rise. October and November’s figures were also revised down to -0.1% and -0.2% respectively, from 0.0% and -0.1% previously. Hence, it was the third straight month that retail sales fell.

Retail sales are now decelerating strongly following the spike induced by one-off compensation payments for the introduction of the carbon tax, with annual sales growth falling to only 2.3% from 2.7% in November (see next chart):

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The southern states of Victoria, South Australia and Tasmania are more or less experiencing a retailing recession, with all three states recording negative sales growth over the year. By contrast, the mining states/territories continue to power along (see next chart).

Looking at volumes only, retail sales were basically flat over the December quarter and up by 2.6% over the year, with most segments experiencing decreases in sales volumes over the quarter, but increases over the year (see next chart).

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However, the southern states are experiencing a retailing recession in volume terms as well, with Victoria, South Australia and Tasmania each experiencing at least two consecutive quarters of negative sales growth (see next chart).

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When adjusted for population growth, retail sales have remained essentially flat since December 2007, which followed 15 years of strong growth (see next chart).

Clearly, retail sales are a long way off the heady days pre-GFC, when sales were juiced by high rates of credit growth and ever-rising asset prices.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.