Australian retail sales likely to remain subdued in first half of 2011

16:23, December 24, 2010      

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Australian retailers expected a subdued Christmas to continue into the first half of 2011 before a pick up later in the year, industry groups said on Friday.

Australia's National Retailers Association (NRA) said in the week leading to Christmas the sector remained subdued and unexceptional compared to previous years.

"The feedback from the retail sector is that the sort of malaise that has been affecting the sector continues to limit Christmas trading," NRA executive director Gary Black told Australian Associated Press (AAP).

Shoppers remain cautious although discounting, a stronger Australian dollar and online retailers have provided a stream of bargains to domestic consumers.

Australian National Retailers Association (ANRA) chief executive Margy Osmond said consumers had become more frugal over the past two years.

"They have become amazingly conservative and even age groups previously that have not been known as for it are turning to spending less and saving."

Osmond said her organization expected the retail sector to improve in 2011 but at a slower pace than previously forecast.

A strong labor market, with economists tipping the jobless rate to fall further in 2011 as the economy gathers pace, is expected to underpin consumption.

Economist Savanth Sebastian from Australian financial services firm CommSec, said the retail sector would be subdued during the first half of 2011 but further growth in the labor market would lift consumption.

"I guess in the short term you would expect sales will remain sluggish and subdued but this new era of inherent conservatism seems to remain heavily entrenched and would not expect it to change too dramatically in the near term," Sebastian said.

"The longer-term story, the reason we are a bit more optimistic as it comes down to the strength in the labor market," he said.

"The unemployment rate will continue to slide over 2011 and also the wealth gains in equity markets will support activity going forward as well."

Source: Xinhua
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