In a surprising turn of events, Australian retail turnover fell by 0.2% in October, contrary to the forecasted 0.2% rise. According to seasonally adjusted figures from the Australian Bureau of Statistics (ABS), Australians spent $35.76 billion in the nation’s retail outlets during October. This marked a decline from the $35.825 billion spent in September and was $120 million below the most recent peak of $35.887 billion in November 2022 (adjusted from the restated $35.918 billion).
The decline in October followed previous increases of 0.9% in September 2023 and 0.2% in August 2023. The ABS suggested that consumers may have curbed their spending in anticipation of Black Friday sales last weekend.
Ben Dorber, the ABS head of retail statistics, noted that retail turnover dropped in October after a brief uptick in September, with all retail categories except food retailing experiencing a decline. Dorber explained, “It looks like consumers hit the pause button on some discretionary spending in October, likely waiting to take advantage of discounts during Black Friday sales events in November. This is a pattern we have seen develop in recent years as Black Friday sales grow in popularity.”
If this trend continues, retailers could expect a significant drop in December sales, as was the case in 2022. In December of that year, following the November peak of $35.887 billion (which had risen by $550 million from October), sales plummeted by a staggering $1.5 billion as shoppers reduced spending across the board.
The Reserve Bank’s rate increases of 0.25% in November and December may have also contributed to decreased consumer confidence, especially in the lead-up to Christmas, as rising home mortgage repayments added financial pressure. Additionally, monthly inflation exceeding 7% annually would have further eroded consumer confidence.
The ABS reported that the only retail industry to record an increase in October was food retailing, with a rise of 0.5%. Conversely, all non-food-related retail industries saw declines, reversing the gains observed in September. The largest drop among the non-food industries was in clothing, footwear, and personal accessory retailing (-1.0%), followed by household goods retailing (-0.6%), department stores (-0.6%), and other retailing (-0.4%). Cafes, restaurants, and takeaway food services also recorded a second consecutive fall (-0.4%).
Regarding the decline in spending in cafes, restaurants, and takeaway food services, Mr. Dorber stated, “Spending in cafes, restaurants, and takeaway food services has slowed in recent months in response to rising food prices and cost-of-living pressures. It is now back to a similar level to what we saw in July 2023.”
The ABS further noted that sales growth varied across the country, with five states and territories experiencing a decline. Victoria (-0.8%), NSW, and the ACT (each with -0.5%) saw the largest drops and recorded their first monthly fall in retail turnover since June. In contrast, Western Australia led the way with a rise of 0.8%, and Queensland and Tasmania also saw increases.