The National Retail Association has this week downgraded its annual forecast for actual retail sales in 2015/16, following sustained, flat growth across the third quarter.
Between January and March, retail sales have been soft, with only minimal growth in trend terms.
For this reason, the NRA now forecasts that the Australian retail industry will generate $298.6 billion in sales, which represents a reduction of 0.2 per cent on the $299.2 billion that was originally anticipated in January.
Analysis conducted by the NRA suggests that the below average sales growth can be explained by a variety of factors, including continued volatility in global financial markets, a drop in the Australian stock market, and a cooling of residential prices, especially in Sydney and Melbourne.
The soft labour market, and low job vacancy rate, at least in some parts of the country, is also expected to be impacting on sales growth across the retail industry.
Combined, it is believed that these factors have caused some consumers to be more careful with their spending in recent months, something which is supported by the relatively flat consumer confidence ratings that have also been reported recently.
Given flat consumer confidence, and below average growth in retail sales, it is hoped that Reserve Bank of Australia’s recent decision to drop the official cash rate will have the desired effect of improved borrowing and spending across the economy.
If there is a bolstering of sales for the retail industry across the final quarter of 2015/16, the NRA is still anticipating forecast growth of 4.4 percent for the current financial year, which is still a solid figure for the industry in broad terms.
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For more information, please contact Cameron Meiklejohn, Industry Research & Data Analyst, on (07) 3240 0156 or by email.