the surge in housing construction is helping lift spending as people furnish and fit out their new homes. Photo / Brett Phibbs
the surge in housing construction is helping lift spending as people furnish and fit out their new homes. Photo / Brett Phibbs
Australia's May interest-rate cut and federal budget measures to loosen small business purse strings failed to provide a significant boost to retail spending in the month.
Australian retail spending rose 0.3 per cent in May, official figures show, short of economists' expectations of a 0.5 per cent rise. It wasa small improvement on April's 0.1 per cent slide, which was the first fall since May last year, figures from the Australian Bureau of Statistics showed.
Commonwealth Bank of Australia economist Diana Mousina said retail figures have been disappointing the past few months, despite what should have been positive influences. In early May the Reserve Bank cut the cash rate by a quarter of a percentage point for the second time this year.
One of the measures in the May 12 federal budget was increasing the instant asset write-off to $20,000, from the previous threshold of $1000.
"The small business package in the Federal Budget has had a positive influence on small-business asset spending: eg, electronics," Mousina said. "This impact should be more evident in the June data."
Mousina said the surge in housing construction is helping lift spending as people furnish and fit out their new homes. Household goods had the strongest rise of all the retail categories, up 0.9 per cent in May. This trend is expected to continue, she said.
"The lift in dwelling prices also means that the costs of moving have increased and households are instead choosing to renovate."
ANZ economists Katie Hill and Jo Masters said weak wages growth appears to be a key factor weighing on discretionary spending.
"A disappointing May retail sales print provides further evidence that consumer spending has failed to pick up in 2015," they said.
JP Morgan Australia chief economist Stephen Walters doesn't expect spending will get a boost from increased consumer confidence any time soon.
Oz shopping in May •Hardware and garden supplies up 1.7%. •Furniture, floor coverings and textiles up 1.2%. •Groceries up 0.7%. •Clothing down 1.3%. •Newspapers, books down 3%. (Source: ABS seasonally adjusted numbers
