Consumer confidence improves as world economy settles

Sarah Harvey

AFTER a gloomy end to 2012 for retailers, the new year could finally herald some flickers of good news.

The settling of the world economy has finally begun to calm spenders, even as the high Australian dollar and fall in mining investment remains a concern nationally.

That is the word of retail forecasts from Deloitte Access Economics, released on Wednesday and charting the final three months of last year.

Retail spending across the board remained lower than hoped with retailers following the lead of their mining counterparts, cutting costs in order to survive the sluggish conditions.

But there was some green shoots beginning to break through as low interest rates from the Reserve Bank work through the economy and consumer confidence improves.

For Queensland, the retail sector is stronger than the national average, increasing 5% in the final months of last year.

It appears - for now at least - to be trudging ahead even as the Queensland Government and mining sector cut workers.

That rate of growth could plateau over coming years, as those slashings begin to bite on spending habits.

Retailers in New South Wales are struggling by comparison, but lower interest rates will be particularly celebrated in Australia's most populous state, because its citizens hold the most debt.

Deloitte Access Economics predicts some improvement to the home-building industries, which should hopefully knock some benefits into the retail sector.

Victorian, South Australian and Tasmanian retailers have been going through particularly tough times as the high Australian dollar hold them back from stronger sales.

If that dollar could just slide back, much of Australia's retail sector could reap the benefits.

Topics:  deloitte access economics economy retailers

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