Sign that spells doom for Aussie retailers
The numbers on Christmas spending from the Australian Bureau of Statistics are more No, No, No than Ho, Ho, Ho.
Let's get a handle on just how bad Christmas was. First we look at seasonally adjusted numbers, as usual. They fell. The worst result since the Christmas of the global financial crisis.
Seasonal adjustment is a complex thing, however. The Australian Bureau of Statistics tries to smooth out the changes month to month to allow us to compare. Sometimes that smoothing can introduce wrinkles.
It is helpful to look at the original data from before they did the seasonal adjustment. You might be surprised at just how much more money we usually spend in December than in the other months of the year.
What this shows is that December retail spending was bigger than November and also slightly higher than December last year. Please don't get the impression the shops were literally empty during December. There was still Christmas shopping. Just not as much as we expected.
The point is that, traditionally, after a healthy November of spending, you'd see a big increase in December too. In 2019 there wasn't, partly because the healthy November came at the expense of December - people shopped earlier last year.
But it wasn't just the new popularity of November's online sales that made December weak. It was also smoke. According to the ABS, the smoke that choked NSW in December meant a big fall in spending on fun. "Specifically, food retailing and cafes, restaurants and takeaway food services were negatively impacted," ABS director Ben James said.
Retailers would have hoped that the difference between spending in December 2018 and December 2019 would be more than a measly 2.4 per cent. Given inflation and population growth, that's actually going backwards.
So the seasonal adjustment reveals a deeper truth. December was bad in context. Retailers who were expecting a big December to take them through the lean times in January and February must have been deeply disappointed.
No wonder retailers have been ringing the insolvency specialists. We already know about Bardot, Jeanswest and Harris Scarfe, but there must be more right on the edge of disaster, desperate to find out if this year will be good enough to let them survive a little longer.
So, can we expect sales to have grown well in January?
Ooof. Obviously not. The smoke that choked Sydney in December spread. Victoria and the ACT also spent much of January breathing through masks. Adelaide had fires and smoke. Basically, the whole east coast was an inferno. And that's on top of the recent phenomenon of January sales being weak. Boxing Day sales just aren't the drawcard they once were.
Then we get to February, and the tourist dollars that would usually be flowing in are instead drying up as panic about coronavirus spreads.
It's been a perfect storm of bad news for retailers, who might have dared to hope for a good year on top of everything they've endured recently.
The slump in retail concerns all of us. Consumer spending makes up more than half the economy, and if it goes into a tailspin, that flows outwards to the rest of us. Job losses become more likely, pay rises become more unlikely.
What can we find as a circuit breaker? The RBA is not acting for now, but the Budget is coming up, and we can hope there will be some relief in store, something that lifts incomes and reinstates enough confidence to get Aussies spending at the shops again.