Retail and food sales didn’t just drop in Australia over Christmas, with global markets reporting similar holiday trading drops.
The US raked in US$505.8 billion in retail and food sales in December 2018, representing a decrease of 1.2 percent from the previous month. The Commerce Department said on Thursday that the drop in trade month-on-month represents the biggest decline the country has seen since 2009, with revenue dropping in almost every category.
According to Chief Economist at Pantheon Macroeconomics, Ian Shepherdson, these results are “unbelievable” considering earlier reports suggested sales in December were at “record highs” when the Redbook chain-store sales survey was released earlier in the year. “These numbers are astonishing and impossible to square”, he said.
The December results were below economist expectations for the month, which were set at a 0.1 percent increase.
On a more positive note, retail figures for the key Christmas period were 2.3 percent higher than December 2017, while total sales for October 2018 until December 2018 were up 3.7 percent on last year. This reveals a similar pattern in retail spending in the US as we’ve seen in Australia over recent months.
The US retail trade report shows sharply weaker consumer spending, which is troublesome as more than two-thirds of economic activity comes from the sector. Shepherdson does emphasise, however, that the results “are unlikely to be representative of the trend over the next few months.”
Retail trade figures for the US were reported later than expected because the Commerce Department was affected by the partial government shut-down. January sales were originally scheduled for release on Friday, but there has been no indication on what the updated release date will be.
Australia had similar December results to the US market, with the Australian Bureau of Statistics reporting a sales drop of 0.4 percent in seasonally adjusted terms.
Online retail turnover down under was also lower in December than it was in November, as the digital sector contributed 5.6 percent of total retail turnover for the month, down from 6.6 percent in November. The ABS attributed this drop in performance to “the increasing importance of the November month for online sales”. However, this figure is still an improvement from December 2017, when online sales contributed 4.8 percent of total retail revenue.