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Retail spending shows some signs of recovery, new figures show.
May ABS retail trade figures released yesterday show a “modest” 0.5% increase in consumer spending, seasonally adjusted.

This follows a rise of 0.1% in April and will have many retailers crossing their fingers that there are green shoots on the horizon after a dismal few months of flat growth.

Looking at the figures more closely, the ‘Other’ retail category, which includes tech resellers, department stores and personal accessory retailing saw a 0.5% increase.

The majority of industries recorded a rise in trading last month, according to the Australian Bureau Statistics, with cafes, restaurants and takeaway food (+1.4%) and household goods retailing (+0.8%) the main drivers of the growth.

Year on year the rise in retail last month was 3.5%.

Federal Treasurer Wayne Swan said the latest stats were “heartening” and “more evidence of the resilience of our economy in the face of global turbulence.”

However, he noted “despite today’s positive result, we know that parts of our retail sector remain under pressure from changing consumer preferences and the more cautious consumer behaviour that we’ve seen since the GFC.”

From a state perspective, New South Wales (+0.7%) recorded its third consecutive monthly rise, while Western Australia (+1.1%) is still the strongest performing state, Victoria (+0.5%), Queensland (0.5%) and the Northern Territory (1.6%) all rose in May.

However, there were falls in South Australia (-0.6%), Tasmania (-1.0%) and the Australian Capital Territory (-0.1%).

The trend estimate for Australian retail turnover rose 0.4% in May and marked the strongest rise (in dollar terms) since June 2010.

Australian Retailers Association (ARA) said the rise was “welcome” news for the struggling retail sector, saying the rise could be attributed to consumers shopping for the colder weather.

 

However, Russell Zimmerman, ARA Executive Director, said while there was a modest rise in consumer spending, the upward trend would probably be short lived as increased pressure on household budgets caught up with consumers.

“Families have recently been hit hard with more financial pressure as a result of the Carbon Tax, which the ARA does not believe has been adequately compensated for.

“For retailers, the cost of operating a business is moving upwards as cost increases throughout the supply chain as a result of the carbon tax are captured by this vulnerable economic sector, which cops pressure from both the supplier side and the consumer angle.”

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