With Christmas season and summer holidays just around the corner, consumers are starting to loosen their grip on their wallets.
The chart below shows that domestic spending has picked up based on the electronic card transaction data for November 2012.
The value of transactions to November this year was up 5.0% from the previous year. This growth exceeded the rate recorded over the same period in 2009 (1.0%) and 2010 (4.4%) but lies below the growth in 2011 (6.5%). Annual spending was up by 4.1% in all core industries.
Further, sales of durable goods, such as furniture, whiteware and electronic goods, were up 3.6%, a strong growth compared to the 1.6% rate in November 2011.
Motor vehicle and fuel retailing sales remained strong. In the 12 months to November, spending on fuel rose 9.7%, though this was most likely due to rising fuel prices. Motor vehicle sales rose by 7.4% on the previous year.
The latest electronic data, despite showing some improvement, still convey weak growth in domestic spending. As the charts above show, the latest retail sector performance, both in sales and number of transactions, were still below historically high levels (Nov 07).
With employment and income prospects remaining uncertain, we expect the retail sector to have lacklustre growth for next year.