According to Commsec chief economist Craig James, growth in retail sales should be recognised after Saturday’s election, whereby consumers can “get on with life”, stating that “not much is likely to change across the economy” until then.
James’ comments come after the Australian Bureau of Statistics (ABS) yesterday released retail data for July, which revealed that spending had risen just 0.1% for the month, compared to economists’ expectations of 0.4%. Acting as an enormous drag on the result was an 7.9% fall in spending at department stores, such as Myer (ASX: MYR) and David Jones (ASX: DJS).
Although the Reserve Bank decided to leave interest rates at their record low of 2.5% yesterday and provided little guidance as to when they would next be moved (or in which direction they could be moved), it seems that the levels of consumer spending could play their role on any future decisions.
James believes that “the RBA is clearly waiting for the election to get out of the road so it can more accurately gauge what shape the economy is in, and determine how consumers, investors and businesses are responding to previous rate cuts.”
In response to the subdued retail spending data, investors have traded down shopping centre operator Westfield Group (ASX: WDC), which is currently down 1.9% at $10.90 per share.
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.