Rate cuts and schoolkid bonuses help lift retail sales by 0.5% in May: Westpac

There's some good news for retail landlords, with retail sales up a solid 0.5% in May, slightly better than the 0.2% gain expected, according to ABS figures.

Westpac attributed the better-than-expected figures for May in part to the impact of lower interest rates and government support payments to families.

“The May result suggests rising incomes and interest rate cuts provided more of a lift despite the muted response from consumer sentiment and signs of ongoing cautious behaviour,” says Westpac.

“Rate reductions and fiscal payments ('schoolkids' bonuses totalling $2.1 billion) will give support in June-July, suggesting the second-quarter retail result should be a reasonable one.”

All states recorded monthly rises led by WA (up 1.1% for the month).

“While retailers and the consumer sector more broadly have had a better than expected start to 2012, many have been under intense pressure over the last few years and will still be experiencing pressures on profitability from an aggressive pricing environment,” noted Westpac.

“Most notably, the sector has been shedding staff fairly aggressively, with employment across the broader consumer sector (retail plus consumer services sectors) down an alarming 2.7% in the year to May.”

ABS revisions resulted in the April's 0.2%  fall revised up to a 0.1% rise and March's 1.1% increase was marked down slightly to a 0.9% gain, “smoothing the recent monthly pattern of spending but leaving in place a 0.4% trend rate of growth – a 4.7% annual pace (10-year average is around 5%)”.