Official figures released today by the Australian Bureau of Statistics revealed an improvement in retail trade in January. However, Australia's current account deficit has worsened.

The latest ABS Retail Trade figures show that Australian retail turnover rose a marginal 0.4 per cent in January 2011, seasonally adjusted, following a rise of 0.2 per cent the previous month. Economists' forecasts had centred on a 0.3 per cent rise for January.

Food retailing (2.5 per cent), other retailing (2.1 per cent) and department stores (2.3 per cent) recorded rises in January 2011. Turnover fell in household goods retailing (-4.6 per cent), clothing, footwear and personal accessory retailing (-2.5 per cent) and cafes, restaurants and takeaway food services (-0.3 per cent).

Turnover rose in Western Australia (2.7 per cent), South Australia (2.4 per cent), Queensland (0.3 per cent), the Northern Territory (4.7 per cent), the Australian Capital Territory (2.2 per cent) and New South Wales (0.1 per cent).

Turnover fell in Victoria (-1.0 per cent) and Tasmania (-1.0 per cent). Trend turnover remained relatively unchanged (0.0 per cent) in January 2011. This follows relatively unchanged estimates in December 2010 (0.0 per cent) and November 2010 (0.0 per cent). Trend turnover rose 2.0 per cent in January 2011 compared with January 2010.


Thirst for a bargain kick starts 2011 for retail

January retail figures show Australians continuing thirst for a bargain has kick started the retail year for 2011, but retailers are unlikely to be celebrating a retail revival just yet, Australian National Retailers Association (ANRA) CEO Margy Osmond said today.

“The ABS data out today gives retail a 0.4 per cent lift in January, almost hitting the monthly 0.5 per cent average, following a disappointing 0.2 per cent increase in December 2010.

“Retailers will be putting this down to an extended and expansive Boxing Day sales season, which ran two weeks longer than the traditional sale period, ending in late, rather than mid-January.

“Australians are choosing to tidy up the family budget, pay down debt and put some money away for a rainy day.

“Recent surveys show they continue to drive a hard bargain with the retail sector – of 1000 Australians asked- 48 per cent said they would only shop when items were on sale, indicating that consumer bargain hunting behaviour is becoming entrenched.

“Despite the good January numbers, household goods retailing headed south dramatically recording a -4.6 per cent drop, the biggest fall in more than a decade. This was reflected in recent ANRA surveying, 30 per cent put off a major purchase in January

“Also down, are clothing, accessories and footwear, which can be attributed in large part to the unpredictable weather the country has experienced this season. This sector dropped by 2.5 per cent.

“So while January showed some positive movement for the sector, it seems unless the discounts keep coming, consumers won’t be shopping and retailers can’t stay on sale forever. It may be the ghost of discounting haunts us still,” Mrs Osmond said.

For retailers, the picture is likely to get worse before it gets better, with a huge 93 per cent saying they intended to spend the same or less in March.

“The early part of the year is traditionally soft for retail, but as there was little growth through December and January, any cut backs in shopping Australians make now will add to the load retailers are carrying.

“The sector continues to be stretched. Figures released yesterday show the corporate gross operating profit of retail businesses dropped by 2.6 per cent, the second consecutive quarterly drop and the third fall in 2010.

“Historically gross operating profit has gone up by 3 per cent every quarter – to see regular decline is an indication of just how much retail was struggling in 2010, it’s what we want to avoid in 2011,” Mrs Osmond said.

Current account deficit widens

Meanwhile, Australia's financial position in relation to the rest of the world worsened in the December quarter, with the current account deficit widening to $7.3 billion from a downwardly revised deficit of $6.490 billion in the September quarter. The median market forecast was for a deficit of $7 billion in the December quarter.

Exports of goods and services decreased $358m and imports of goods and services decreased $1,084m (2 per cent). The primary income deficit rose $1,545m (13 per cent).

In seasonally adjusted chain volume terms, the net goods and services deficit rose $24m (5 per cent) to $472m in the December quarter 2010. This is expected to make no contribution to growth in the December quarter 2010 volume measure of Gross Domestic Product.

Australia's net International Investment Position (IIP) fell $5.7b to a net liability position of $782.1b in the December quarter 2010 from $787.8b in the September quarter 2010.

Australia's net foreign debt liability decreased $26.7b to a liability position of $650.3b. Australia's net foreign equity liability increased $21.0b to a liability position of $131.8b.

The ABS, however, said net exports will make no contribution to fourth quarter gross domestic product.