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Worrying retail conditions

The fall in consumer spending is reflected in the continuous drop in retail conditions as reported by National Australia Bank’s business survey for June.


Described as “worrying low levels”, the NAB has compared the retail conditions, which has deteriorated to -24 points, to similar levels that were last witnessed in the 2000s during the global recession and is by far the weakest industry.

According to NAB, the high Australian dollar, continued cautiousness of households and concerns about the global outlook is eroding business confidence sharply in June. The index is now in line with the relatively weak levels recorded in December where NAB surveyed businesses immediately following the floods.

The NAB now forecasts that there will be weaker conditions in the second and third quarter of the financial year 2011 based on continuing softness in discretionary spending, as well as the “severe weakens” in retail.

The GDP growth is expected to be of 1.7 per cent in 2011 and 4.6 per cent in 2012.

  • jenni

    I have been in retail for 16 years now and this is the worst quarter by far , this is cautious of the likes I don’t think I have ever seen in my lifetime .My prediction is that there will be a lot more retailers go down before the years end as landlords still don’t get it that the high rents of the last decade were unsustainable and businesses just cant pay it anymore , costs are so high these days that even a small down turn in sales for some businesses have a dire effect .

  • Laurence Mabarrack

    I have been involved in furniture with my father for over 40 years the last 20 in retailing as well as manufacturing . The last 12 months and in particular the last 6 have been the hardest of all that time. The retail side only just exists. The recession “we had to have” was a walk in the park in comparison . Customers have money but it is a hard task to get them to part with it . The carbon tax is a smoke screen to divert the attention away from real issues about the state of the economy .

  • skinsolutions001

    could not agree more with Jenni. My landlord is sending me bankrupt as a result of me being unable to pay my rent 2 months in a row. I have a beauty salon in an affulent area and i still can not drive people in here no matter how much i discount treatments and products.
    The decent thing to have done would have been the governtment to help subsidise my rent at the market rate so now my landlord will have an empty shop for god know how long when i move out!

  • Paul Watkins

    We have declining consumer confidence responding to poor political leadership at all levels of government, international economic uncertainty, and a threat of interest rate rises that is impacting large sections of the economy. There appears to be no political will to address this economic driver.
    In addition we seem to have statisticians who are responding to historical data that is not reflective of the current conditions. I suspect that we are in for a bumpy 12 months with considerable employment fallout.

  • Chris

    I know the exact reason why discretionary spending has fallen. It’s the unsustainable residential market, the high mortgage and rent stress caused by property. Mortgages and rents are the highest per capita than any other developed nation due to overvalued residential property. People incomes are squeezed due this very high fixed expense cost as compared with other general living expenses including electricity, strata, insurance etc. If there is policy adjustment by government soon to alleviate property prices by either increasing supply, and reducing demand. The market will eventually dramatically self correct itself through the collapse of retail and other business in Australia that require the economy to have equal share of the pie. This will see industries collapse, resulting in unemployment, resulting in default of mortgage payments and eventually a decrease in property prices. A recession if you will. We have only real estate industry and the machine to blame. Bring down rents bring down property price/ mortgages and save this hurt for families. Property ownership should be seen as a basic right, not an investment. If every single family had a home, that was supplied and paid by government, imagine how much healthier and happier we all will be? With a rich nation like ours with it’s booming resource sector, is this not possible? I say it is possible. But what is not experienced is not missed.

  • Warren

    With 10 years in retail on the Gold Coast (including manufacturing and wholesaling) we saw the slow down start around two and a half years ago from xmas 2008. Progressively we found it harder and harder to match the turnover of respective periods from over all those years…. every month we tried better initiatives, new products, lower prices by cutting margins and worked as ‘smart’ as we could…we closed the last of our stores in March this year and now trade, ‘more or less’ from home and online. Without exception, all of our business friends are doing it extremely tough and find the retail sector still has some very tough times ahead. It as very sad to see so many businesses closing with so many shops now for rent. It is extremely difficult to believe that up to this month where Westpac forecast a rate drop near Christmas, that all the economic experts were ( and still are) predicting a rate rise. We all know the only growth is in the mining sector so why are the businesses inside the retail. sector the only ones who seem to know how tough and hard it really is. Absolutely everything is on sale and will be for some time to come. I dont have a solution but an idea… the Government to rethink its role in owning and managing assets in this Country and perhaps mine its own resources…stop making only a few people rich!