Deloitte national retail, wholesale, and distribution lead David White believes retail’s Christmas decline had led to a shift in the way the Australian economy was perceived.
‘Hugely important trading period’
“It’s obviously a hugely important trading period,” Mr White said. “It does have some quite significant implications.”
Deloitte’s latestCFO Sentimentreport said “overall sentiment has shifted – from a glass half full on outlook and risk appetite, to more of a glass half empty” during the second half of last year.
It attributed the fall in consumer spending to diving house prices and a tightening of credit after the financial services royal commission.
“The flow-on to consumer spending has been limited so far, but with one of the highest debt-to-income ratios in the world, the impact of declining wealth will likely create some headwinds for the year ahead,” the report said.
Mr White urged calm over how much weight should be placed on the disappointing December figures.
‘Spending will bounce back’
“I think the outlook for the economy is still positive,” he said. “I think, in terms of retail sales, first half of the year we were strong, second half of the year we weren’t as strong.”
He also said the traditional Christmas period sales had been pulled into November with Black Friday and Cyber Monday deal periods gaining traction in Australia. November’s retail trade figures recorded a seasonally adjusted 0.4 per cent increase.
“The brought forward sales wasn’t the equivalent of a December/Christmas trading period but it’s reflective of the patchy and difficult trading conditions in that period and following through to January,” he said.
“Spending will bounce back.”
The Reserve Bank decided to keep interest rates at 1.5 per cent on the same day as the ABS released its discretionary spending figures andGovernor Phillip Lowe walked away from previous statements the next move would be up.