- Retail trade rose 2.0% month-on-month in November marking the highest leap in two years
- The increase in spending was driven by Black Friday sales events
- The result is unlikely to support a February hike, according to ANZ economists
Retail trade rose 2% month-on-month and 2.2% year-on-year on a seasonally adjusted basis in November, the Australian Bureau of Statistics (ABS) revealed today.
It’s the biggest monthly jump recorded by the measure since November 2021 and appears to have surprised economists on the upside.
Today’s read follows a 0.4% fall in retail trade recorded in October, which might have been a result of punters pulling purchasing punches in anticipation of Black Friday sales events, wherein NAB later found shoppers spent nearly $9 billion.
"Black Friday sales were again a big hit this year, with retailers starting promotional periods earlier and running them for longer, compared to previous years,” ABS head of business statistics Robert Ewing said.
“The strong rise suggests that consumers held back on discretionary spending in October to take advantage of discounts in November.
“Shoppers may have also brought forward some Christmas spending that would usually happen in December.”
Thus, it could be the case that November’s trend reverses if shoppers closed the wallet in December.
That's the expectation of ANZ senior economist Adelaide Timbrell.
"This result is unlikely to support a hike from the RBA in February," she said.
"Once strong population growth and rising prices of retail products are taken into account, the underlying trend for retail is still running relatively weakly."
Still, the increase in spending has the potential to worry the Reserve Bank of Australia (RBA) ahead of its February meeting, as the board will be looking for signs of a slowing economy.
However, the central bank will likely be more concerned with upcoming inflation data, due for release on the 31st.
The latest retail trade data came as a surprise to economists at the big four banks.
Prior to the release, CommBank and NAB had forecast a 1.2% uptick in retail trade while ANZ predicted a 1.5% jump.
The increase in November’s retail trade figures was largely driven by spending on discretionary goods.
Household goods retailing lifted 7.5% in the second last month of 2023, as that of department stores rose 4.2%, and spending on clothing, footwear, and personal accessory retailing increased 2.7%.
“Retailers told us that the success of Black Friday sales was boosted by consumers seeking out discounts in response to cost-of-living pressures,” Mr Ewing said.
The central bank will also have a chance to consider December's retail sales data prior to making its next decision.
Retail trade figures for the final month of 2023 will drop on 30 January.
Looking ahead: Monthly inflation read
The ABS will release its Consumer Price Index (CPI) read for the month of November tomorrow, followed by CPI for the December quarter on 31 January.
“We are confident the data will show a continued easing in inflationary pressures,” CommBank economist Stephen Wu said of the upcoming monthly CPI release.
CommBank is tipping inflation to ease to 4.4% year-on-year in November, down from 4.9% in October.
Westpac and NAB are both predicting inflation will slip to 4.5% on an annual basis while ANZ expects it will fall to 4.1%.
Will the RBA board hike in February?
Right now, NAB is the only big four bank expecting the RBA to increase the cash rate once more in February.
The bank, the first to forecast the November hike, has long predicted the cash rate to peak at 4.6% in early 2024.
ANZ is skeptical of another hike, though neither it nor peers CommBank and Westpac have gone so far as to rule out the possibility of a February increase.
Image by Markus Spiske on Unsplash.