Instead, retail sales growth was a “boomy” 1.2%m/m in November, the fastest rise since early 2013! It represents the third straight month of growing sales, with the expansion each month faster than the one before. It’s early days but, on this evidence, it seems the previously cautious consumer is finding its feet again.
Retail spending increased in all industry categories except department stores, where there was a 1.1% fall. Despite this, discretionary spending was by far the firmest over the month. Household good retailing was the strongest, soaring 4.5%m/m over the month. Sales of clothing, footwear and other accessories also was healthy. Food sales were flat. Growth in sales outside the food category was the strongest since 2009. By region, sales growth was strongest in Victoria and Tasmania, and weakest in Queensland and the Northern Territory.
Consumers still face headwinds, including weak wages growth, high energy prices, record high debt, a softening housing market, and fragile confidence. But, too much emphasis is placed on record low wages growth, and not enough on physical jobs. Arguably, it’s more important that the job market has been booming, with employment last year rising for its longest uninterrupted monthly stretch since the upswing from the last recession in the 1990s. Not surprisingly, the unemployment rate has been falling.
The misguided obsession with weak wages growth means we may be missing the wood for the trees on households. Indeed, the focus on wages instead of booming jobs might explain why household spending has significantly surprised expectations to the upside in recent months. An important takeaway for directors is that, if the consumer indeed is back, interest rates will not stay at current record lows for too much longer. AUD spiked after the release of today’s data as the FX market contemplated the same possibility.