The 2.2 per cent growth in retail turnover for March was in line with predictions and showed signs of slow recovery, as cashed-up consumers re-entered the market without guilt.
The Australian Retailers Association (ARA) executive director Richard Evans warned against an overreaction to the March retail trade figures that were a result of economic stimuli from late last year.
“The March growth was not a result of the recent household stimulus package. Economic stimuli, including interest rate cuts and the government’s stimulus funds, don’t impact the retail sector overnight – that is not the way the market works. ARA modelling indicates any change in interest rates or other economic stimuli takes between three and six months to affect the market.
“The retail sector has been retracting since coming off the peak of the retail cycle in late 2007, but ARA’s predictions were the interest rate cuts from September last year would begin to affect the market in March 2009. These results indicate our predictions were correct,” said Evans.
The March figures may show early signs of the government’s first $10.4 billion stimulus funds beginning to enter the market with the household goods sector – which has been hard hit by low consumer confidence – showing signs of slow growth (1.3 per cent).
Food retailing has been one of the strongest retail categories throughout the economic downturn, but it showed the lowest rate of growth in March (0.4 per cent). However, growth in department stores (13.2 per cent), clothing and soft goods retailing (6.4 per cent), cafes, restaurants and takeaways (1.4 per cent) indicated cashed-up consumers were slowly coming out of financial hibernation without guilt.
“In fact, with heavy discounting in department stores and clothing retailers, many consumers have obviously taken advantage of some great bargains.
“Retailers remain optimistic about improved growth in the September quarter with the mitigating factor for economic recovery being employment. However, recovery will be patchy with retailers looking forward to more growth, but with some slow trade in the months ahead.
“Consumers are cashed up and they are a very important part of economic recovery. We’re urging employers right through the supply channels to hold onto their staff who have the key to economic recovery in their pockets,” said Evans.