Looking at the breakdown of sales, everything that is in the "discretionary" sales basket like household goods and department store sales has been weak lately off a low base. Things like food sales, restaurants and cafes and small retailers have been slower in the last few months after performing relatively well over the last few years.
The latest job vacancy data from the ABS, which is a more comprehensive report than the month ANZ series, showed chunky drop in vacancies posted, which is not good news for employment growth. The chart on the right expressed this relative to the size of the labour force, with vacancies at its lowest level since the crash in 2009.
This paints a picture of mediocre growth in Australia at the end of the year. This should ensure that the RBA retains its easing bias, although its not clear that they will act on it at the first possible opportunity.
Poor retail sales data have failed to move the Bank in the past, with real retail sales enduring 3 negative quarters before the RBA finally cut rates in September 2008, just before the collapse of Lehman Bros sent financial markets into a tailspin. While growth has showed broader weakness this time around compared to early 2008, the RBA has already been cutting rates.
More important is the improving prospects for growth elsewhere, particularly in China. And this has already materialised into tangible benefits for Australia through the explosion in the iron ore price, which is almost touching $160/t. This recovery has already affected investment plans, with Fortescue recommencing expansion projects, although is still aiming to delever through asset sales.
