Data Diary

Australian retail sales – also flagging

Posted on 02 March 2010

Also, released today were Retail Sales for January. Following is the summary from the ABS:

CURRENT PRICES

• The trend estimate increased 0.4% in January 2010. This follows a 0.4% increase in December 2009 and a 0.4% increase in November 2009.
• The seasonally adjusted estimate increased 1.2% in January 2010. This follows a 0.9% decrease in December 2009 and a 1.5% increase in November 2009.
• In original terms, Australian turnover decreased 23.8% in January 2010. Australian turnover increased 2.0% in January 2010 compared with January 2009.
• In trend terms, all industry groups increased in January 2010. The largest increase was in Cafes, restaurants and takeaway food services (0.7%) followed by Department stores (0.4%), Clothing, footwear and personal accessory retailing (0.4%), Household good retailing (0.3%), Food retailing (0.3%) and Other Retailing (0.3%).

That’s a pretty important heading that “Current Prices” because if you strip out the effect of inflation, retail sales are showing signs of exhaustion:

Take the 12 month rolling average to smooth out seasonality, and then adjust for inflation, and it looks like retail sales have stalled. All-in-all must have been a pretty difficult decision for the RBA today.  My guess is that it was the resilience of house prices that pushed them – cause as Ric Battelino said in December (click here to read the full speech):

As you know, the cash rate is currently 3.75 per cent. This is still 50 basis points below the previous cyclical low of 4.25 per cent in 2001. On the surface this might suggest that the cash rate is still unusually low. However, with other interest rates in the economy having risen by at least 100 basis points relative to the cash rate over the past couple of years, they are now above their previous cyclical lows.

Another way to think about this is that the current level of deposit rates, housing loan rates and business loan rates would have been consistent, before the crisis, with a cash rate of at least 4.75 per cent.

Taking these considerations into account, it would be reasonable to conclude that the overall stance of monetary policy is now back in the normal range, though in the expansionary segment of that range.

Enough data for one day.  As Radio Birdman opined, “I’m going down…into a data maelstrom” or something like that:

Gotta give Rob Younger credit for inventing the double microphone – it’s louder that way.