Figures released today by the Australian Bureau of Statistics found that retail spending increased by 3.8 per cent in December of last year – the biggest increase since 2000.

“Amid the doom and gloom of the global economy, this is great news for the domestic economy,” said Patricia Forsythe, executive director of the Sydney Chamber of Commerce.

“This may well be the first indication that the Federal Government’s first stimulus package combined with interest rate cuts has improved consumer confidence.”

Australian Retailers Association (ARA) executive director Richard Evans said this growth showed signs of returned consumer confidence after the first economic stimulus package landed in bank accounts in December.

“The December retail figures are one giant leap of growth for retailers; one small step towards economic recovery. Consumers have done their job injecting the Rudd Government’s first stimulus package back into the economy via retail sales. But there is more work to be done for the benefit of vital cash to flow right through supply channels,” said Evans.

Forsythe said these are still early days in the economic downturn, but these are nonetheless positive signals to be receiving.

“These figures confirm research conducted by the Sydney Chamber of Commerce in the lead-up to Christmas, which found that only 29 per cent of respondents intended to spend less at Christmas than they did the year prior.

“It’s particularly pleasing that NSW led the national spending-spree with an increase of 4.9 per cent,” she said.

In seasonally adjusted terms, all states had an increase in December 2008: New
South Wales (+4.9 per cent), Victoria (+3.9 per cent), Queensland (+3.2 per cent), South Australia (+2.4 per cent), Western Australia (+2.8 per cent), Tasmania (+4.2 per cent), Northern Territory (+4.8 per cent) and Australian Capital Territory (+3.0 per cent).

Household good retailing was up $292 million (+9.9 per cent), department stores up $123 million (+8.3 per cent) and clothing and soft good retailing up $73 million (+5.8 per cent) and food retailing was up $107 million (1.4 per cent).

“These figures underscore that strong and decisive government intervention can bolster consumer confidence during these challenging economic times,” said
Forsythe.

“Reduced interest rates and the Rudd Government’s second stimulus package all point to improving conditions for consumers but this is only the beginning of returning consumer confidence. For the upward trend to continue, this cash spike needs to flow through the supply channel to the farm gate or manufacturer,” said Evans.

“The retail sector is the barometer of the economy and when it recovers (anticipated from the September quarter), other segments will follow three to six months later…”