Retail trade rose by 0.2 per cent in April after falling by 0.4 per cent in March and rising by 1.3 per cent in February. Annual spending growth held steady at 3.1 per cent. But sales by large retailers rose by 0.7 per cent in April and by 5.0 per cent over the year.

Job Advertisements fell by 2.4 per cent in May to be down 18.4 per cent on a year ago.

Petrol prices: According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 0.5 cents a litre to 142.4 c/l in the week to June 2. But the wholesale price hit a 10-week high. Pump prices are likely to rise 2-3 cents over the next 7-10 days.

Company profits rose by 3.0 per cent in the March quarter.

What does it all mean?

Overall the Australian economy appears in good, but not great shape. Consumers are still spending – particularly if you track the reliable measure of large retailer sales. And companies are making money, with profits up by the most in 18 months. But businesses are still reluctant to hire staff. Still, this is unlikely to change until the election is out of the road.

Arguably not too much is likely to change across the economy until after the election is done and dusted. As we travel across the country the overwhelming feedback is that investors and businesses want the election to be held now so people can get on with life.

Motorists should brace for a little more pain at the petrol pump. While the regional gasoline price has flattened out, previous increases combined with a lower Aussie dollar has lifted the wholesale (terminal gate) price to 10-week highs. Another 2-3 cents will be added to the pump price over the next 7-10 days.

What do the figures show?

Retail trade

Retail trade rose by 0.2 per cent in April after falling by 0.4 per cent in March and rising by 1.3 per cent in February. Annual spending growth was steady at 3.1 per cent.

Non-food retailing fell by 0.1 per cent in April after falling 1.3 per cent in March but lifting 1.5 per cent in February. Sales by chain-store retailers and other large retailers rose by 0.7 per cent in April, the fourth straight gain. Sales by chain-store retailers and other large retailers were up 5.0 per cent on a year ago.

The biggest gain in spending in April occurred at “Other Recreational retailers” (Entertainment media, sporting goods, toys etc), up 4.7 per cent; followed by Clothing, up 3.2 per cent and “Other Retailing” (flowers, antiques, stationery etc), up 1.6 per cent.

The biggest drop in the month was by Newspaper and book retailing, down 4.4 per cent; Furniture, floor coverings, housewares and textile goods retailing, down 2.7 per cent; and Department stores, down 2.0 per cent.

Sales rose in five of the eight states and territories, led by the ACT (up 1.0 per cent), and followed by NSW (up 0.6 per cent), Victoria (up 0.3 per cent), South Australia (up 0.2 per cent) and Queensland (up 0.1 per cent). Sales fell the most in Northern Territory (down 1.6 per cent), followed by Tasmania (down 1.0 per cent) and Western Australia (down 0.8 per cent).

Job advertisements

The combined number of internet and newspaper job advertisements, as tracked by ANZ, fell by 2.4 per cent in May after easing by 1.7 per cent in April. Job ads are down 18.5 per cent on a year ago to 132,456 – a near four year low.

Newspaper job ads fell by 4.7 per cent in May, while the far larger component of internet job ads fell by 2.3 per cent. ANZ provides data on newspaper job ads by state but given their minor importance in relation to internet ads and poor record in tracking total advertisements, the data is not useful for analytical purposes.

Business indicators

Company operating profits rose for the first time in nine months, up 3.0 per cent in the March quarter. Further, profits only fell in six of the 15 industry groups. Profits rose by 9.5 per cent in Mining, by 8.8 per cent in Wholesale trade and 1.3 per cent in Retail trade. But profits fell by 6.6 per cent in Manufacturing.

Unincorporated gross operating profits rose by 2.5 per cent in the March quarter. Business gross operating profits rose by 2.9 per cent. Company profits before tax rose by 8.4 per cent.

Inventories fell for the first time in 18 months, down by 0.6 per cent in the March quarter after a 0.2 per cent rise in the December quarter. Inventories fell in Mining by 2.0 per cent, Wholesale trade by 2.2 per cent and by 1.7 per cent in Accommodation and food services.

Sales fell in only eight of the 15 industry sectors in the March quarter. Sales rose most in Mining, up 3.5 per cent followed by Financial and insurance services, up 3.0 per cent. But sales fell most in Construction, down 3.9 per cent, and Arts and recreation services, down by 3.4 per cent.

In current prices sales rose in four of the states and territories in the March quarter with Tasmania up 4.4 per cent but ACT down by 9.8 per cent.

Wages & salaries rose by 0.4 per cent in the March quarter to be up just 2.9 per cent over the year.

Petrol prices

According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 0.5 cents a litre to 142.4 c/l in the week to June 2. The metropolitan price fell by 1.0 c/l to 140.6 c/l, while the regional average price rose by 0.4 c/l to 145.9 c/l. The average diesel price was up by 0.5 cents a litre to 147.0 cents.

Average unleaded petrol prices across states over the past week were: Sydney (up 2.9 cents to 142.9 c/l), Melbourne (down 7.5 cents to 135.1 c/l), Brisbane (down 0.4 cents to 142.3 c/l), Adelaide (up 0.7 cents to 139.8 c/l), Perth (up 2.8 cents to 142.4 c/l), Darwin (up 0.2 cents to 158.9 c/l), Canberra (down 0.6 cents to 147.3 c/l) and Hobart (up 0.1 cents to 150.7 c/l).

Today, the national average wholesale (terminal gate) unleaded petrol price stands at 134.52 c/l, up 2.2 cents a litre from a week ago to a 10-week week high. CommSec expects the national average retail petrol price (pump price) to rise by 2-3 cents a litre over the next 7-10 days.

Last week the key Singapore unleaded petrol price fell by US15c (0.1 per cent) to US$115.30 a barrel. But in Australian dollar terms the Singapore gasoline price rose by 30c (0.3 per cent) last week to $119.49 a barrel or 75.15 cents a litre. Over the past four weeks in Australian dollar terms the Singapore unleaded price has risen by 7.56c a litre (11.2 per cent).

What is the importance of the economic data?

The Bureau of Statistics’ Retail trade publication contains the most current readings on the performance of consumer spending. The ABS surveys 500 ‘larger businesses’ and 2,750 ‘smaller businesses’. Retail trade covers spending at a broad range of retail outlets but excludes both petrol and motor vehicle sales. A weak retail trade result may point to a slowing economy as well weighing on the share prices of listed retail stocks. But retail trade estimates can’t be assessed in isolation – it is important to look at the influences determining future trends in consumer spending, such as income, employment and confidence levels.

The quarterly Business Indicators publication by the Bureau of Statistics contains measures such as inventories, company profits and income from sales. Higher inventory (stock) levels can be either intentional or unintentional. If stocks are low and sales are expected to rise in the future, businesses will seek to build up stocks. However an unintentional build-up in stocks is where sales fall short of expectations, leaving more goods on the shelves than desired. If profits are increasing then this may point to increased capital spending and employment in the future. Rising profits are also a sign of favourable business conditions.

The monthly Job Advertisements release is a leading employment indicator. Employers only seek additional staff if business activity is strong, and more importantly, if they expect that conditions will remain favourable in coming months. It takes around 5-6 months for the new staff to be added to the payrolls. But a fall in job advertisements would have a more immediate impact on monthly employment estimates.

Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory's metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.

What are the implications for interest rates and investors?

We can’t rule out another rate cut tomorrow, but believe it will be counter-productive. While people tend to rejoice when rates are eased from high levels, they tend to fret more when super-low rates are cut further – suggesting conditions are very weak.

The Reserve Bank will be encouraged that consumers are spending and companies are making money. Overall corporate and consumer balance sheets are in good shape.

The economy is in a holding period until the election. Businesses must carefully manage inventories and costs while also actively trying to boost revenues to get consumers and other businesses to part with cash.