Weaker discretionary spending dragged retail sales lower in September as the stimulus from the federal government’s cash payments receded.

The result is likely to encourage the Reserve Bank of Australia (RBA) to leave interest rates unchanged in December, after hiking in each of October and November, economists said.

Retail sales fell 0.2 per cent in September to a seasonally adjusted $19.719 billion, the Australian Bureau of Statistics (ABS) said on Wednesday.

Over the September quarter, retail sales fell by 0.4 per cent in seasonally adjusted volume terms.

The monthly fall confounded market expectations for a rise of 0.5 per cent, while the quarterly decline was as expected.
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David Jones chief executive Mark McInnes says the next 12 months for the retail sector will be difficult, but consumer confidence appears to be returning.

The up-market department store chain last month sharply upgraded its expectations for fiscal 2009 second half earnings and annual earnings.

Mr McInnes said on Sunday that sales had picked up in May and June on the back of federal government’s fiscal stimulus payouts and more normal trading in the equities market.
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A dramatic fall in retail sales shows another interest rate cut is needed to stimulate the economy, retailers says.

Retail sales fell for the first time in five months, down two per cent in February to a seasonally adjusted $18.87 billion.

The last time retail sales fell on a month-to-month basis was in September 2008.
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A lift in sales from retailer Westfield indicates the federal government’s efforts to refloat the economy are working, Treasurer Wayne Swan says.

Mr Swan said fresh data showed Westfield’s retail sales were up four per cent in Australia while sales had dropped in the US.

The government has set aside tens of billions to spend on infrastructure and cash handouts to try and ward off a recession.
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The 0.8 per cent rise in the volume of retail trade may have been disappointing but should help ease fears that the economy contracted in the December quarter.

Economists had mostly expected a rise of a bit more than one per cent in the real-terms estimate of retail trade from the ABS, so the figures released on Wednesday undershot expectations slightly.

Whether this means the government’s initial fiscal shot in the arm was less effective than hoped, or simply that beneficiaries of the handouts did not spend all the money at once, or that they spent it on items (like petrol) not covered by the survey, remains to be seen.
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