Australia experienced another poor retail sales result with an unexpected drop in the April figures where analysts were expecting a 0.2% rise.

The ABS released their seasonally adjusted figures and the negative result was way below the expectations of financial markets, analysts and the government. Although retail sales have been performing poorly, it was the the first decline in sales since December of last year. The previous month (March) was a bit more positive coming in at 0.3% rise and providing analysts with some confidence that April would also show a positive rise.

Drilling down deeper into the breakdown of sales, there were some gains and some losses. The biggest declines were in areas which are typical of a environment with low consumer confidence such as cafes, restaurants, clothing and other household goods.

The rises were in other retailers, department stores and food outlets.

The biggest worry was that there was another drop in non-food sales of 0.2% which has occurred in 3 of the last 5 months. Non-food purchases are relative to discretionary spending.

Geographically, most of the biggest declines in spending were in the states with the biggest populations being New South Wales and Victoria. This big drop seems to be an indication of the confidence of the consumer driven by lower house prices. New South Wales fell 0.5% and Victoria 0.2%.

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