Consumers turned back to department stores as the weather turned colder

Lilly Vitorovich
(Australian Associated Press)

 

Consumers returned to embattled department stores to shop for clothing and shoes in May as the weather turned colder.

Seasonally adjusted retail spending rose 0.4 per cent to $26.674 billion in May, ahead of market expectations of a 0.3 per cent increase.

Department stores recorded the strongest increase in spending of any sector for the month, up 3.9 per cent compared with a 0.9 per cent drop in April, according to Australian Bureau of Statistics data.

Clothing, footwear and personal accessories spending also lifted, up 2.2 per cent in May, compared with a 0.8 per cent fall the preceding month.

ABS director of quarterly economy-wide surveys Ben James said department stores spending led the sector’s gains.

“There was also a strong result in clothing, footwear and personal accessories,” Mr James said.

“Both industries were able to rebound after unusually warm weather impacted April sales.”

Major department stores chains, including David Jones and Myer have struggled to entice shoppers in recent years in the face of tough competition from online sellers and international retailers, such as Zara, that have set up shop in Australia.

JPMorgan economist Ben Jarman said the increase in clothing sales was surprising as there had been reports of a slow start to winter sales.

However he noted the change came after a string of weak sales results for the sector.

AMP Capital senior economist Diana Mousina said she does not expect the improvement in spending across department stores and clothing to continue.

“Department store retailing has been on a downtrend for years due to intense competition,” Ms Mousina said in a research note.

Food spending rose 0.3 per cent in May, following a similar performance in April.

Mr Jarman said spending on household goods, other retailing – which includes recreational and cosmetics goods, and cafes and restaurants was disappointing.

“Spending at cafes/restaurants has slowed pretty significantly over the past six months, revealing the pinch on discretionary spending being imposed by tighter financial conditions” he said.

Household goods spending rose 0.1 per cent, other retail spending fell 0.1 per cent, while spending on dining out slipped one per cent.

The retail spending figure for April was revised to 0.5 per cent from the initial 0.4 per cent gain reported by the ABS last month.

The ABS also released international goods and services figures on Wednesday.

Australia’s trade surplus widened to $827 million in May, from $472 million the previous month, as a four per cent increase in exports outpaced a three per cent rise in imports.

The result for May was short of market expectations of a $1.2 billion trade surplus, however.

The Australian dollar rose on the retail spending news, up from 73.95 US cents immediately before the data release to be trading at 74.03 US cents at 1610 AEST

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