Today, the latest retail sales data was released.
Amid a backdrop of macroeconomic uncertainty, investors were eager to see how Australian consumer spending was tracking.
Australian retail sales increased 0.3% in March, according to the Australian Bureau of Statistics (ABS). This was driven by a 0.7% lift in food-related spending despite disruptions from a cyclone in northeastern Australia. Retail turnover increased in all states and territories except Queensland.
This also marked the third consecutive month of Australian retail sales growth.
Annual retail sales also grew 4.3% in March.
Commenting on the release, ABS head of business statistics, Robert Ewing, said:
Retail spending continues to grow at a steady pace, with food-related spending in supermarkets and grocery stores the main driver of growth..supermarket and grocery store sales were especially strong in Queensland where households stockpiled essentials in anticipation of Ex-Tropical Cyclone Alfred.
The retail sector has delivered mixed results this year. JB Hi-Fi Ltd (ASX: JBH) and Harvey Norman Ltd (ASX: HVN) have been standout performers, having risen 10% and 12%, respectively, at the time of writing. However, companies such as Lovisa Holdings Ltd (ASX: LOV) have been less fortunate. Lovisa shares are down 17% for the year to date.
Meanwhile, supermarket giants Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) have been among the strongest ASX 200 performers, climbing 15% and 7% for the year to date.
What to make of this data?
According to Bloomberg, retail sales data can be an important consideration for monetary policy. Consumption accounts for more than half of Australia's gross domestic product (GDP). The Reserve Bank of Australia (RBA) has previously cited the outlook for household spending when discussing the likelihood of an interest rate cut at its next meeting. The RBA will hold its next meeting on 19-20 May, where an interest rate cut is widely expected.
Earlier this week, The Motley Fool's Sebastian Bowen reported that the US gross domestic product (GDP) contracted in the first quarter. That outcome was largely due to a 41% surge in imports (another component in the GDP equation), as companies sought to get ahead of tariffs.
Overall, this latest piece of economic data suggests the economy is in decent shape. However, it is backward-looking and reflects a period before Trump's Liberation Day tariffs began to disrupt the global economy. As a result, April data is likely to be more meaningful.
