Sept. 13 (Bloomberg) -- Australia’s retail sales growth may struggle to rebound from a two-decade low as the nation’s stock market slumps and consumer confidence weakens, curtailing household spending, according to a Deloitte Access Economics report.
Sales volumes are projected to increase 1.5 percent in the 12 months through June 30, compared with 1.3 percent growth in the 2010-11 fiscal year that was the weakest in 20 years and a 2.6 percent advance a year earlier, the Canberra-based research company said today.
“There are no immediate triggers for a turnaround either, with the international financial market turmoil which occurred in August likely to have kept sales in a weak position during the month of August and into September,” the report stated. “Retailers now face the prospect of going from bad to worse.”
David Jones Ltd. and Myer Holdings Ltd., the country’s two largest department store chains, are among retailers struggling to attract consumers who are saving more and paying the developed world’s highest borrowing costs. Also weighing on sentiment are five straight months of declines in Australia’s benchmark S&P/ASX 200 Index, the longest losing streak since the September 2008 collapse of Lehman Brothers Holdings Inc. started a global financial crisis.
One scenario facing the nation’s stores would be a further deterioration in global markets that leads the Reserve Bank of Australia to lower interest rates and the government to inject economic stimulus. That would be a temporary boost “ but will leave another long hangover,” according to the report.
The more likely outcome is a global economy that “muddles through the next few months, producing a slow but steady return of consumer confidence,” it said.
Retail prices may gain 1.9 percent this fiscal year, compared with a rise of 1.2 percent last year, the report said.
Monthly employment growth in Australia averaged 2,800 through August this year, less than a tenth of the average of 30,500 jobs added per month in the first eight months of 2010.
--Editors: Michael Heath, Brendan Murray
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