Australia’s retail sales seem to have rebounded in August

Australia’s retail sales are expected to have recovered in August after coming in weak in July. A statistical quirk was mainly responsible for the disappointing retail sales data in July. Department store sales dropped 6.2 percent sequentially in July. Excluding department stores, retail sales increased 0.4 percent month-on-month. However, the steep drops show shifts in the timing of winter sales. On earlier occasions, sales had rebounded solidly in August.

Thus, overall sales are likely to have recovered strongly in August, said Societe Generale in a research note. But the degree of the recovery would possibly be tempered by a sub-trend growth in food sales that account for around 41 percent of the total, after a strong growth in July. Similarly, this trend applies to sales at restaurants, cafes and takeaways that rose 1.2 percent sequentially in July.

“Looking at retail sales more broadly, after a somewhat lacklustre 2Q (+0.5 percent qoq in nominal terms, 0.4 percent in real terms), we expect a slightly more dynamic 3Q, also in terms of overall household consumption”, added Societe Generale.