Data wrap – sluggish retail sales as job vacancies decline

Retail sales growing weakly
New data released by the ABS yesterday showed that South Australian retail sales grew weakly over the summer period. The value of South Australian retail turnover in trend terms rose by just 0.1 per cent in January and February respectively. In comparison, Australian retails sales rose by 0.2 per cent in both months.

In seasonally adjusted terms, South Australian retails sales rose by 0.7 per cent in February, compared with 0.8 per cent nationally. While this result is more heartening, seasonally adjusted data are quite volatile, meaning this improvement will need to be sustained for a few more months before a clear recovery emerges.

In any event, there has been a noticeable slowdown in the momentum of South Australian retail sales since last autumn. Annual growth in the trend estimate of retail turnover has slowed from 3.2 per cent in August 2018 to 1.4 per cent in February 2019. Australian retail sales have also moderated during this period, but still rose by a respectable 2.9 per cent over the last 12 months.

The slowdown in South Australian retails sales over the past year is consistent with a flattening off in employment growth, modest wages growth and subdued consumer confidence. A weaker trend for South Australia compared to national retail sales is also consistent with relatively slower population growth.

Overseas goods exports values improve
South Australia’s overseas merchandise exports performed well over the recent summer period, at least in value terms (volume data is not yet available). According to latest international trade data from the ABS, the total value of South Australian overseas goods exports in the three months to February 2019 was up 8.7 per cent compared to the corresponding period a year earlier. In comparison, national goods exports rose by 16 per cent between these periods.

The rise in the value of overseas goods for South Australia is heartening given that farm exports have probably fallen in response to less favourable seasonal conditions. Although commodity level data is not yet available for February, earlier data suggests that the recent lift in overseas goods exports for South Australia has been largely driven by copper exports.

Building approvals stabilise, but major areas of weakness remain
The large downturn in the value of building approved that emerged for South Australia in 2018 appears to have come to a temporary halt, but there remain significant negative trends within the building sector.

The trend estimate of the value of total building jobs approved rose by 0.9 per cent in February 2019, following a 0.3 per cent rise in January. However, the value of building approved in February was still well down compared with the same period in 2018 (-25 per cent), which suggests that building activity will continue to moderate over coming months.

The rise in the total value of building approved for South Australia in February was brought about by a solid increase in the value of residential building approved (3.3 per cent), whereas non-residential building approvals fell (-3.9 per cent) for the ninth consecutive month.  Non-residential building approvals have fallen sharply over the past year (-47 per cent), while residential building approvals also remain at a lower level compared to a year earlier (-5.9 per cent) despite recovering over recent months.

The recent upturn in the value of residential building approved will be of small consolation to home builders as the number of dwelling units approved has continued to decline. The number of dwelling units approved in South Australia fell by 1.1 per cent in February 2019 to be down 14.2 per cent compared to a year earlier. Dwelling units approvals are now weak by recent historical standards, being down 12 per cent compared to their past decade average level.

Job vacancies decline
Employment growth in South Australia has been stagnant for almost a year now. Unfortunately latest job vacancies estimates from the ABS given little cause for optimism that this trend will improve significantly in the short term. The number of job vacancies in South Australia in February 2019 was 9,500, a 13 per cent decrease from the previous quarter and a 8.7 per cent decrease from the same quarter last year. In comparison, job vacancies have continue to grow at the national level (by 1.1 per cent in the February quarter 2019), but the rate of growth has slowed over the past year.