The $2.85 billion in early carbon tax compensation and schoolkids bonus payments boosted retail spending 0.6 and 1.2 per cent in May and June, but when the sugar hit stopped in July - the month the government turned off its spending tap in order to return to surplus - spending slumped 0.8 per cent.
Department spending, which climbed 1.2 and 3.7 per cent in May and June, dived 10.2 per cent in July - its biggest slide in seven years.
The ABS figures suggest consumers brought forward planned department store purchases in May and June rather than deciding to re-embrace the sector. Over the past year department store sales are down 5.3 per cent.
David Jones sales have been falling for seven consecutive quarters. Myer sales have been shrinking for four years.
“Retailers had cautiously welcomed the significant improvements in trading figures in the past couple of months,” said Australian National Retailers Association chief executive Margy Osmond. “Sadly their caution proved correct"...
“With government stimulus from the federal budget, as well as carbon price compensation, families felt secure enough to shop – but now the bottom has dropped out of that and it’s back to the savings bunker they run.”
Every state and territory went backwards in August – including the mining states of Western Australia and Queensland for the first time this year. The Australian dollar slid half a US cent on the news to a five-week low of 102.40 US before recovering to close at 102.58 US cents, down half a cent on Friday.
Separately released ABS figures show company profits slid for the third consecutive quarter in June, slipping another 0.7 per cent to be down 6.5 per cent over the year.
Mining profits were down 18.3 per cent over the year, non-mining profits were flat. Over the quarter profits fell in 10 of the 15 industry groups. Manufacturing profits slid 8 per cent, retail profits 3.8 per cent.
Inventories grew 0.6 per cent driven by increases in only two sectors - mining and wholesale trade, suggesting a build up of stocks as demand slowed.
Wage and salaries grew just 0.8 in the quarter, the weakest growth since the global financial crisis. ANZ job advertisement figures also released yesterday show a further slide of 2.3 per cent in August - the fifth consecutive monthly fall. Job advertisements are down 9.6 per cent over the year.
Job advertisements have been weakening for six months in the mining-heavy states of Western Australia, Northern Territory and Queensland.
“Underneath this all are the falls in commodity prices which started back in late 2011,” said Deutsche Bank economist Adam Boyton. “With the latest slump in iron ore prices likely to see a pronounced fall in the terms of trade come the end of the year - and hence a more pronounced slowing in economy wide incomes growth - the case for further monetary easing in interest rates remains strong.”
The Reserve Bank is expected to leave rates on hold at its Sydney board meeting today (TUES) but might acknowledge concern about the weakness in iron ore prices in the statement released after the meeting, opening the door to a further cut in rates.
The TD securities inflation gauge climbed 0.6 per cent in August. Excluding volatiles it climbed 0.2 per cent. The RP Data house price index was flat.
In today's Sydney Morning Herald and Age
. June: Stimulus payments stimulate, so we're spending big
. June: Suddenly we're buying cars big-time, and starting to shop
. March: The two Australias drift apart