Australia November retail sales jump by most in two years on Black Friday boom

Australian November retail sales surged the most in two years as shoppers feasted on Black Friday discounts, though analysts suspect spending was likely brought forward and the gains could reverse in December.

Retail sales rose 2 per cent from October, the biggest jump since November 2021, to A$36.51 billion ($24.54 billion), data from the Australian Bureau of Statistics (ABS) showed on Tuesday. That compares with analysts expectations for a 1.2 per cent increase and a revised drop of 0.4 per cent in October.

Sales were up 2.2 per cent from a year earlier, a sluggish figure compared with the post-pandemic annual boom rate of 19 per cent in mid 2022, as high interest rates and cost of living pressures weighed on household incomes.

"Black Friday sales were again a big hit this year, with retailers starting promotional periods earlier and running them for longer, compared to previous years," said Robert Ewing, ABS head of business statistics.

"The strong rise suggests that consumers held back on discretionary spending in October to take advantage of discounts in November. Shoppers may have also brought forward some Christmas spending that would usually happen in December."

The results are distorted in part by the seasonal adjustment process which has yet to catch up with the newfound popularity of the Black Friday and Cyber Monday events. This tends to boost November sales at the expense of December and ripples over several months.

Interest rates have risen by 425 basis points to a 12-year high of 4.35 per cent since May 2022, but consumer spending, while slowing from its double digit growth, has remained resilient thanks to rising house prices, a surge in population and the savings from the pandemic stimulus.

The November report showed that sales were driven by discretionary goods, with spending on household items up 7.5 per cent, reversing a 1 per cent decline the prior month. Consumers also spent more on department stores and on clothing and footwear, up 4.2 per cent and 2.7 per cent respectively.

The Reserve Bank of Australia is likely to look through the November retail sales result, having noted in its December minutes that the Black Friday sales had distorted usual seasonal spending patterns, making it difficult to obtain a clear reading of the underlying momentum in spending.

The Australian dollar was little changed at $0.6723 and three-year bond futures held at 96.27. Swaps wagered that the RBA's tightening campaign is most likely over, with about 40 basis points of easing priced in for 2024.

An ANZ survey showed on Tuesday consumer confidence jumped to the highest in almost a year at the start of 2024, with sharp increases in confidence among homeowners as house prices rose and rates have likely peaked.