Retail sales slip after solid start to 2013

Retail sales have fallen in March after a strong start to the year, led by falls in clothing, footwear and personal accessories, sustaining expectations the Reserve Bank could lower the cash rate tomorrow.
Nanjing Night Net

Retail sales fell 0.4 per cent in March seasonally adjusted, below economists’ expectations of a 0.1 per cent rise.

Sales of clothing, footwear and personal accessories dropped by 4.2 per cent, while household goods slipped by 1.5 per cent. Other retailing, which includes pharmaceuticals and cosmetics, fell 1 per cent as department stores saw their sales ease by 0.1 per cent.

But food sales rose 0.8 per cent as more people ate out, with cafes, restaurants and takeaway food outlets enjoying a 0.2 per cent lift. Retail turnover rose 3.2 per cent for March compared to the previous corresponding month, the Bureau of Statistics data showed.

BT Financial Group chief Chris Caton said people should not be alarmed about the unexpected fall in retail sales figures.

“We shouldn’t panic about this number. It follows two very strong numbers and there’s almost always a correction out there eventually,” Mr Caton said.

“It’s not really a sign that retail is suddenly weak again. The influence that we don’t know about is the earliness of Easter and what that may have done [to the figures].”

ANZ economic analyst Savita Singh said despite the seasonally adjusted fall, retail sales were still 2.2 per cent higher than last year.

“Together with the improvements in house prices, these data suggest that some interest-rate sensitive parts of the economy are beginning to improve,” Ms Singh wrote in a research note.

“However, despite better consumer confidence and spending, there has been no notable improvement in business conditions and the non-mining investment outlook remains soft.”

There was no change in financial markets’ expectations of an interest rate cut following the release of the retail numbers. The markets were pricing in a 52 per cent chance of a 25 basis points cut at the RBA meeting tomorrow.

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