The Westpac-MI Leading Index released yesterday was in line with retail predictions of improved growth by the September quarter with the rest of the economy lagging three to six months.
The Australian Retailers Association (ARA) executive director Richard Evans said the retail sector operates three to six months ahead of the rest of the economy and retailers should expect improved growth in the September quarter with further recovery in the fourth quarter.
“For months now retailers have recognised our economy as being on the verge of a patchy recovery but they have been a lone voice amongst messages of gloom and doom. Today’s figures forecasting growth for the rest of the economy in the first half of 2010 confirm the retail sector’s predictions,” said Evans.
Of course, the underpinning factor is employment security with consumers holding the key to economic recovery in their pockets. However, job security is threatened by negative narrative from economists whose forecasts so far have been inaccurate, said Evans.
“Retailers have been working hard to stimulate consumer spend all year, and recent reports of leading retailer Myer’s expectations for reasonable year-on-year growth indicate consumers are beginning to respond by opening their wallets.”
Other leading retailers including JB Hi-Fi, Country Road and Dominos have all recorded strong half yearly profits indicating a trend towards recovery in the retail sector.
“If consumer sentiment continues the upwards trend after the 12.7 percent jump in June, consumers will re-enter the market without guilt in and funds will flow from the retail hub through supply channels leading economic recovery," said Evans.