Retail sales growth best since 2001 unless you’re a butcher or baker: CommSec

Retail property landlords have something to cheer about as retail trade rose by 1.3% in February after rising by an upwardly-revised 1.2% in January, the strongest start to a calendar year in more than a decade.

“Retail trade lifted by 2.5% over the first two months of 2013 marking the strongest start to a calendar year since 2001,” said CommSec economist Savanth Sebastian.

“The latest retail sales data is clearly encouraging. The low interest environment, coupled with buoyant share markets, and ongoing improvement in consumer confidence is supporting retail activity,” he said.

Sebastian notes the broad-based strength in retail activity with sales rising in 19 out of the 20 categories.

“In fact the only weakness in February was in specialised food retailers like butchers and bakers, however even that weakness followed the biggest gain in 16 years,” he says.

“Interestingly non-food retailing - which has been finding conditions particularly difficult over the past year - is now recording a healthy turnaround, having posted strong back to back gains in the past couple of months to be up 4.1% on a year ago.

“Over the past year the retail industry had to contend with an array of negative headwinds, however the latest result may just be the first sign of a revival in fortunes for the beleaguered sector.”

ANZ was more circumspect on the performance of the retail sector for 2013 to date.

"At this stage, it’s too early to tell whether the recent strength in retail sales will continue. Nevertheless, interest-rate sensitive parts of the Australian economy are now showing clearer signs of responding to lower interest rates," the bank said.