Australian consumers aren't happy.
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Weak consumer sentiment weighs on retailers
Consumers are the most unhappy since the financial crisis and with many shoppers struggling with record household debt, it's hard to see if that's going to improve.
Sentiment has remained negative this year all the way through May for the first time since the depths of the global financial crisis in 2009. That's left retailers reeling, hurt car dealerships and made investors bearish on shopping centre operators.
And with many shoppers saddled with record household debt and weak wages growth, it's hard to see the pessimism breaking.
"People are a lot more cautious," said Tony Farnham, an economist at Patersons Securities. "There's not going to be an outbreak of, or surge in retail sales."
The following charts illustrating recent moves in share prices underscore the challenges facing Australia's economy, which is struggling to add full-time jobs and boost wages.
Limping along
The nation's retail stocks have had the worst start to a year since 2008. Only two of the 10 members of the S&P;/ASX 200 Retailing Index are in the black this year -- online travel agent Webjet and Trade Me Group, which runs online classifieds and auctions for New Zealanders.
With an 18 per cent decline, the measure trails Australia's benchmark S&P;/ASX 200 stock index and the MSCI World Retailing index, which has been propelled higher by Amazon.com - viewed as a big looming threat to local bricks-and-mortar stores with its plans to expand its footprint in Australia.
![](http://web.archive.org./web/20170604012908im_/http://www.smh.com.au/cqstatic/12z7v7/consumer1.png)
Retail landlords aching
Weak consumer sentiment is being felt in the high street, with the Australian arm of British fashion retailer Topshop appointing administrators this month, following high-profile collapses of local fashion brands such as Marcs and David Lawrence, children's clothes chain Pumpkin Patch and upmarket labels Herringbone and Rhodes & Beckett.
That's feeding bearish sentiment toward their shopping centre landlords. Westfield Corp., Scentre Group and Vicinity Centres are this year's worst-performing stocks on the S&P;/ASX 200 A-Reit Index, which is tracking the performance of real estate investment trusts.
![](http://web.archive.org./web/20170604012908im_/http://www.smh.com.au/cqstatic/12z7v7/consumer2.png)
Skidding car sales
Sales of big-ticket items such as cars are also suffering as prices rise faster than pay cheques. Passenger vehicle sales fell 7.8 per cent in April from a year ago.
Last week, Brisbane-based AP Eagers, which has seen its shares decline 19 per cent year to date, said the whole industry had been caught by an "unexpected decline" in sales.
The following day, Automotive Holdings Group, a Perth-based holding company for a group of car dealers, cut its full-year profit target on falling sales.
![](http://web.archive.org./web/20170604012908im_/http://www.smh.com.au/cqstatic/12z7v7/consumer3.png)
Lower spending is here to stay even if job growth accelerates, according to David Plank, head of Australian economics at ANZ Bank. He expects data to be released on Thursday will show retail sales in April rose just 0.2 per cent, after falling for two-straight months.
Plank has also cut his forecast for first-quarter economic expansion, for an annual growth rate of just 1.5 per cent -- the lowest since 2009.
Higher employment is taking longer to translate into fatter pay cheques the world over and "households now believe the slowdown in wage growth is permanent," Plank said.
Bloomberg
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