Retail sales figures show divide widening between mining states and rest of country: Brian Redican

February retail sales figures have brought some cheer for retail landlords in Queensland and Western Australia, but not much for those with investments in other states and territories.

According to Macquarie senior economist Brian Redican, the latest ABS figures highlight the widening gap between the performance of resource-rich Queensland and Western Australia and those states not benefiting from the mining boom.

Redican expects the RBA to cut rates next month in what could be the first of three quick cuts to restore confidence in the economy.

He says the monetary policy statement which accompanied the April decision suggested a considerable shift in the central bank's view on the economy over the month.

Prior to April, Redican says the RBA has been suggesting that "any weakness in demand was temporary and so didn't need a policy response".

"That no longer seems to be the view," he says.

Westpac chief economist Bill Evans expects the RBA to cut the cash rate twice by July taking it down to 3.75%.

Nationally, retail sales crept up by just 0.2% over the month on a seasonally adjusted basis, with Queensland the top-performing state, recording a 1.5% increase in sales turnover following a 1.9% gain in January.

Western Australia was second best performer, managing retail sales growth of 1% following a 1.1% gain in January.

The only other state to record an increase was South Australia (0.7% following a fall of 0.4% in January), with the Northern Territory registering no growth following a 3.4% gain in January.

Turnover fell by 0.6% in New South Wales and by 0.4% in Victoria in February, matching similar falls in January, while the ACT declined by 0.7% and Tasmania fell by 0.1%.

"What is interesting is the regional composition there, where it does look like you're getting exacerbating weakness in NSW and Victoria, while Queensland and Western Australia seem to be holding up pretty well," Redican told AAP.

"That divergence is getting wider rather than narrowing but overall is looking fairly sluggish."

Redican says retail sales may rebound in mid-2012 when households get their carbon tax compensation payments, which could be in the range of $300 to $600.

Redican says there will be a strong temptation among households to spend this money.

"That's probably the greatest hope in the near term,” he says.

Across retailing sectors, the largest contributor to the February rise was other retailing (including newspapers, books, stationery and pharmaceutical products) which increased by 1.8%, followed by food retailing (supermarkets and grocery stores) 0.3% and department stores 0.7%.

Turnover fell in clothing, footwear and personal accessory retailing (-1.4%), cafes, restaurants and takeaway food services (-0.7%), and household goods retailing (-0.5%).

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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