Retail Forecasts - November 2017
Jobs are kicking goals but retail is still on the bench
12 December 2017: Employment growth in Australia has come a long way since last year, when annual employment growth was below 1%. Indeed, the economy has seen a net addition of around 356,000 jobs over the past year alone. This improvement indicates that the economy is once again strengthening, with businesses having the confidence to hire again after a weak period last year. And as the labour market tightens, wage growth is creeping up from record lows.
But retail employment and wages are struggling to keep up with other industries, as low turnover growth and intense competition forces operators across the sector to cut costs. Just as retail price growth is well below the wider economy, retail wage growth and employment growth is trailing behind as well.
Since 2012, employment in the retail industry has grown by 3.7% which is roughly half of total employment growth across all industries at 7.3%. This gap is a more recent phenomenon, as retail used to be one of the big job generators across the Australian economy. Chart 1 compares the recent growth path of retail industry employment and total Australian employment.
More detail on retail employment and wage trends is available in our full Retail Forecasts publication.
Key changes since last issue
Retail went backwards in July and August. In seasonally adjusted terms, September was a slight improvement in retail sales after sales fell in the months of July and August.
Wage growth may have stopped falling but is still weak. Wage price growth in Australia remains negligible, currently sitting near series lows at 2.0% over the year ending September. Prices are growing slowly as well, at just 1.8% over the year on average.
Amazon has arrived. Amazon’s official Australian launch occurred on Tuesday 5th December. The Australian Amazon site offers free delivery across Australia of Amazon goods and Amazon Marketplace items (sold by third party sellers). About half of the items sold on Amazon websites worldwide are through the Amazon Marketplace platform. The established sector can stop shadow boxing and now face off against this competitive threat.