There is no sign of respite for the nation's struggling retailers, particularly department stores, as shoppers refuse to spend in the face on an uncertain economy.
The latest retail sales data from the Australian Bureau of Statistics showed a 0.1 per cent fall in March at the same time as many economists had been tipping a rise.
More BusinessDay Videos
Amazon, eBay, Etsy, Alibaba hit out at GST change
Online retail giants Amazon, eBay, Etsy and Alibaba say the federal government has severely underestimated the threat of rival foreign online retailers failing to comply with its planned GST changes, and consumers will be left worse off.
Compared to a year ago, retail sales have now grown just 2.1 per cent the slowest rate of annual growth since 2013.
"The retail sector is verging on recession", Citi economist Josh Williamson said in response to the data.
"Retail trade growth has now been negative in three out of the last four months (no growth per month on average), the sector's worst performance since July to November 2012."
Mr Williamson said the looming crackdown on home lending standards by the prudential regulator would only squeeze consumers more.
The lacklustre data follows a warning from the Reserve Bank of Australia governor Philip Lowe last Friday that the bank's key economic concern was consumer spending and how that would react to any slowdown in housing.
CBA's economists said the result was "much weaker than expected" tipped retail to languish as long as underemployment remained elevated and wages growth was weak.
![Retail sales rose in January.](/web/20170512011509im_/http://www.smh.com.au/content/dam/images/g/u/f/r/g/e/image.related.articleLeadwide.620x349.gw0qa4.png/1494417032538.jpg)
While spending was lacklustre around the country, CBA's team said conditions were especially tough in Western Australia and Queensland.
Cyclone Debbie and storms in parts of NSW would have had an impact, a CBA report said.
"Spending is still taking place, just in a much more sedate fashion, with more circumspect consumers," said CBA economist Craig James.
Trade in department stores (down 0.6 per cent) fell the most in the March and is down 2.7 per cent on a year ago.
Spending is still taking place, just in a much more sedate fashion
CBA's Craig James
Myer is due to unveil its quarterly sales performance on Friday. On Monday the stock fell close to 10 per cent after a scathing research not predicted new international rivals would smash its sales.
Whilst Myer shares lifted slightly on Tuesday, other retailers were in the sellers' sights.
Harvey Norman shares fell 5 per cent to $4.06 while JB Hi-Fi was down 3.87 per cent to $24.11.
A number of high profile retailers have collapsed in the past few months including Pumpkin Patch, Victoria Station, Marcs and David Lawrence.
Australian Retailers Association executive director Russell Zimmerman said the disappointing March restul was are a symptom of "escalating operating costs and systemic economic pressures".
"The generally weak trade figures across the board appear to be caused by myriad of factors including low consumer confidence, political uncertainty, international competition and the effects of housing affordability on hip-pockets," he said.
UBS economist George Tharenou said prices barely lifted in the sector with inflation running at about 1.4 per cent for the year.
99 comments
Comment are now closed