While positive news was delivered by the ABS and the RBA about the retail sector, it’s time to face reality as Australian retailers are experiencing their worst financial year result in two decades.
Deloitte Access Economic’ retail forecast said by financial year, it expects inflation-adjusted retail sales to record a low 1.3 per cent in 2010-11, mainly because consumers are less willing to spend despite there being a “good rate” in income growth.
“The result can be seen in Australia’s savings rate, which has gone from negative in 2005 to a rate of 2.3 per cent pre- GFC, to averaging 9.4 per cent over 2010 and to 11.5 per cent recorded in the March quarter of 2011,” the research said.
Natural disasters, both here and abroad, have also taken a toll on Australia’s productive capacity in early 2011, and reinforced a more sombre consumer mood. For example, a 0.3 per cent sales growth was recorded January, the month of Australia’s devastating floods, and this was followed by February which recorded a solid 0.8 per cent growth. But that improvement was undone in the month of March where further disaster was seen on a global scale with the Japanese earthquake. Retail sales fell by a hefty 0.5 per cent during the month.
“The result is that retail sales are weak at present, but its not all necessarily bad news looking forward. Australia is, after all, in the midst of an unprecedented resources boom and there will be a range of dividends from that – jobs, wage growth, profits and government revenues,” the research said.
“If the household savings rate remains around its current levels, that would mean consumer spending growth was matching growth in disposable incomes – which would be a handy improvement on recent events.”