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Retail sales, job vacancies slip ahead of next RBA call

By Charbel Kadib
2 minute read

The latest retail sales and job vacancies data have strengthened the case for a prolonged period of monetary policy inertia.

The Australian Bureau of Statistics (ABS) published its latest retail sales print on Thursday (28 September), reporting seasonally adjusted monthly growth of just 0.2 per cent in August – below market expectations of a 0.3 per cent increase.

This follows a monthly reading of 0.5 per cent in July and 0.8 per cent in June.

In annual terms, retail sales slumped to 1.5 per cent – the slowest print since August 2021.

According to ABS head of retail sales statistics Ben Dorber, this latest print is further evidence of a shift in consumer spending behaviour following a prolonged period of discretion.

“The modest rise in August shows consumers continued to restrain their retail spending,” he said.

In trend terms, retail sales grew 0.1 per cent over the month and just 1.3 per cent in the year to August 2023 – the weakest annual growth in the history of the ABS print.

“Considering how high inflation and strong population growth has added to retail turnover in the past year, the historically low trend growth highlights just how much consumers have pulled back in response to cost-of-living pressures,” Mr Dorber said.

AMP Capital chief economist Shane Oliver said he expects this trend to continue despite the fastest population growth in roughly 70 years.

“On our estimates, real retail sales are running down 2 per cent on a year ago,” Mr Oliver observed.

Job vacancies dip

Mr Oliver also noted continued weakness in job vacancies, with the latest data also released by the ABS on Thursday.

Job vacancies fell 8.9 per cent over the three months to 31 August and are down 18 per cent from the peak in May 2022.

“The level of job vacancies is still high indicating a still tight labour market, but they are now falling rapidly indicating that the labour market is rapidly cooling.” Mr Oliver continued.

AMP Capital’s base case is for the commencement of monetary policy easing in mid-2024 as macroeconomic conditions soften in Australia and abroad.

“But given falling real retail sales and the softening jobs market, it’s a tough one for the RBA and we continue to see the RBA cutting rates next year starting around June as the economy weakens with a very high risk of recession,” he concluded.