Retail index predicts steady growth in run-up to Christmas

The CHEP Retail Index has predicted that there will be steady retail growth in Australia in Q4 2018.

The index is a lead indicator of Australian Bureau of Statistics retail trade data. Based on transactional data from CHEP pallet movements, it predicts year-on-year retail sales to continue growing in the December quarter.

Retail turnover continues to expand at a steady rate as we enter the final quarter of 2018. This is despite difficult financial conditions for households, as consumers draw on their savings to support spending activity.

However, households can only draw on their savings for so long. The outlook for spending really depends on stronger wage growth.

The labour market is tightening, as businesses continue to feel confident enough to add to their permanent staff. This, in turn, buoys consumer confidence.

A higher trend in pallet movements suggests retailers are confident about conditions as they enter the Christmas period, and expect spending to strengthen heading into the last quarter of 2018.

Index: key figures

  • 6 per cent year-on-year retail growth for November 2018.
  • Turnover of $27.1 billion in November 2018, with year-on-year growth for the month of November increasing to 3.6 per cent.
  • On a quarterly basis, 3.4 per cent year-on-year growth for the September quarter and increasing to 3.9 per cent for the December quarter.

Partner at Deloitte Access Economics David Rumbens said: “Buoyant retail conditions in 2018 have been supported by a rundown of household savings, along with solid employment growth. Retailers are showing some confidence that this rate of spending will be maintained through the crucial Christmas period.

Country General Manager of CHEP Australia Todd Montgomerie added: “We continue to collaborate with our retail customers to support their physical and online markets. And to continue to identify and drive sustainable efficiencies in the supply chain.”

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