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Australian Retail Sales Missed Estimates

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Australia's Retail Sales Decline
  • Australian Retail Sales Missed Estimates

For the first time in four months Australian retail sales have missed expectations, a disappointing outcome given strength in other spending and sentiment indicators.

According to the ABS, sales rose by 0.2% to $25.665 billion in November in seasonally adjusted terms, just half the rate that had been expected by economists.

It was also a noticeable step down from the 0.6% and 0.5% increases registered in the prior two months.

As a result of the weak November result, the annual pace of sales slowed to 3.3%, down from the 3.5% level reported in October.

It now sits at the weakest level seen since August last year.

By category, sales of food (0.4%), clothing, footwear and personal accessories (1.7%) and household goods (0.2%) all increased, offsetting declines at cafes, restaurants and takeaway food services (-0.8%), department stores (-0.3%) and other goods (-0.1%).

Over the past year, sales of clothing, footwear and personal accessories recorded the fastest pace of growth all categories at 5.8%, edging out sales at cafes, restaurants and takeaway food services which increased by 5%.

Food retailing — the largest component of retail sales by dollar spend — increased by 3.1% to $10.312 billion.

Department store sales — at -3.2% — was the only category to record a decline in sales from the levels of a year earlier.

By state and territory, it was the most populous states that outperformed — New South Wales and Victoria — recording solid gains of 0.5% and 0.5% respectively.

Elsewhere sales grew by 0.3% in the Northern Territory and 0.1% apiece in Queensland and Tasmania, helping to offset declines of 0.6%, 0.4% and 0.1% in Western Australia, South Australia and the ACT.

Mirroring the monthly performance, Australia’s eastern states and territories recorded the strongest growth in sales over the past year.

Despite falling modestly in November, sales in the ACT grew by 6.4% from November 2015, the fastest pace reported across the nation.

At 4.3%, 3.5% and 3.7%% respectively, sales in New South Wales, Victoria and Queensland also outperformed, a sign that higher house prices and reasonable labour market conditions continues to support household spending.

At the other end of the spectrum, sales in Western Australia fell by 0.5% over the past year, indicating that weak labour market conditions as a result of the mining infrastructure downturn continue to weigh on spending.

At 0.3% and 2.8%, sales in Northern Territory and South Australia — highly exposed to the fortunes of the mining industry — were also below the national average.

Despite recording modest growth, the November retail sales report is a disappointment, particularly given strength in other household-specific indicators over the same period.

According to data released by the National Australia Bank on Monday, online retail sales grew by a solid 1.1% over the same period.

That followed a report from the Commonwealth Bank of Australia which revealed that economy-wide spending — including on services — grew at the fastest pace seen since the global financial crisis in November.

The ABS report offsets any optimism that was generated by those reports, casting doubt as to whether household spending — the largest component within the Australian economy — is picking up.

However, not all is lost.

Excluding the today’s report, sales growth has been robust in recent months, suggesting that the weakness seen in November may have been partially as a result of statistical payback.

Consumer confidence also remains elevated, particularly for current family finances, which is a promising sign given it has a tendency to act as a lead indicator on household spending.

Looking ahead, markets will be paying close attention to the December retail sales report, especially as it includes quarterly retail sales volumes which feeds into Australian GDP.

It declined unexpectedly in the September quarter, contributing to the large quarterly contraction reported in Australia’s national accounts.

The market reaction has been modest to the November retail sales report with the Australian dollar and ASX 200 both weakening on the result.

Australian bond futures have also strengthened, indicating that yields have fallen.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Crude Oil

Brent Rises to $73 Per Barrel as Oil Producer Iran Plans Another Attack on Israel

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The international crude benchmark, Brent Crude, rose to $73 per barrel as it rose 29 cents or 0.4 percent to settle at $73.10 a barrel on Friday on expectations that Iran will attack Israel from Iraq in the coming days.

The US West Texas Intermediate (WTI) crude gained 23 cents, or 0.3 percent to settle at $69.49.

The market has seized on the news from Thursday that Iran is preparing to attack Israel from Iraq within days.

However, market analysts point out that the impact on oil prices may be muted as the attacks signify a show of strength rather than action. This is why there wasn’t a much price boost.

Iran’s backed groups are currently fighting Israel, including Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen. So, this has seen the two countries engaged in a series of retaliatory strikes within the broader Middle East warfare set off by fighting in Gaza.

In a related development, the US asked Lebanon to declare a unilateral ceasefire with Israel to revive stalled talks to end hostilities between Israel and Hezbollah.

Another factor supporting prices is the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+ which could delay plans to increase supply in December.

The group has always maintained that its planning production cuts rollback would depend on market conditions.

The US, the world’s largest oil producer has been seeing an increase in its production with Exxon Mobil saying its global output hit an all-time high while Chevron also said its US production hit a record high.

This aligns with projections that annual output was on track to hit a record 13.2 million barrels per day in 2024 and 13.5 million barrels per day in 2025.

Last month, OPEC’s production increased by 370,000 barrels per day in October after Libya’s political resolution and its resultant 500,000 barrel-per-day output boost.

Libya’s output recovery led OPEC to raise its production to nearly 30 million barrels daily, even as Iraq, Iran, and Saudi Arabia lowered their output.

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Petrol

IPMAN Pushes Back on Dangote’s Call to End Petrol Imports, Cites High Costs at Refinery

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The Independent Petroleum Marketers Association of Nigeria (IPMAN) has addressed concerns about its members purchasing petrol outside the country.

Investors King reported that Aliko Dangote, the owner of Dangote Refinery, urged Nigerian oil marketers to stop importing petrol and instead lift supplies from his refinery.

Dangote mentioned that the refinery currently has over 500 million liters of petrol in storage and that marketers’ reluctance to lift his product is causing financial losses.

In an interview on Friday, IPMAN’s National Assistant Secretary, Yakubu Suleiman, stated that the association cannot compel its members to buy petrol from the Dangote Refinery due to the deregulated nature of the market.

According to Suleiman, IPMAN members cannot patronize Dangote if his petrol is more expensive than other suppliers. He explained that, for profitability, marketers must seek the most affordable fuel sources.

Suleiman also accused Dangote of trying to monopolize the oil market, noting, “Prices are determined by international pricing. Dangote should ideally be communicating daily about his pricing. But he can’t enforce that we buy only from his depot without stakeholder engagement.”

Suleiman added, “IPMAN cannot simply instruct our members to purchase solely from Dangote Refinery. We operate in a deregulated system. Marketers will source products where prices are cheaper and advise members accordingly.”

He explained, “If Dangote sells at N1000 per liter, and there are other sources selling at N900, we can’t direct marketers to choose Dangote simply because it’s his product. We prioritize lower prices and profit.”

Suleiman also noted that last week, Dangote’s price was higher than other sources, explaining, “For example, last week he offered N995 per liter, with additional costs to transport the product to depots. Independent marketers can’t sell at a profit under these conditions, so we must consider Nigerians’ interests.”

This comes after IPMAN President Abubakar Garima countered Dangote’s allegation that marketers were boycotting his refinery.

He pointed out that marketers cannot load petrol from Dangote’s refinery in Lagos despite having paid ₦40 billion to the Nigerian National Petroleum Company Limited (NNPCL).

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Crude Oil

Rivers State Governor Refutes Claims of NNPCL Shutdown, Labels Report as ‘Propaganda’

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The Governor of Rivers State, Siminalayi Fubara has denied shutting down the Nigerian National Petroleum Company Limited (NNPCL), and other oil companies in the state as retaliation to a Federal High Court’s ruling barring the release of allocations to the state as widely reported.

Shortly after the court’s ruling, a report claiming that Fubara had ordered the immediate closure of NNPC and other oil companies in the oil rich state emerged on social media.

The report alleged that the Rivers State Governor declared that if the government fails to reverse the court ruling, there will be no oil for the country from Rivers.

Reacting to the allegation via a statement signed by the Commissioner for Information and Communications, Warisenibo Joe Johnson, the Rivers government said the report is not only false but a concocted propaganda from the enemies of the state.

The government urged Rivers people to ignore the report, adding that Fubara is committed to the rule of law and does not rely on unconventional and crude approaches to respond to matters of governance.

The statement reads, “The attention of Rivers State Government has been drawn to a spurious news item circulating on social media on “Gov. Siminalayi Fubara shutting down NNPCL and all oil companies in Rivers State”.

“The report was not only false, but a concocted propaganda from the imagination of the author and enemies of the State. The story was also circulated by an inconsequential and unverified medium

“Governor Siminalayi Fubara is committed to the rule of law and does not rely on unconventional and crude approaches to respond to matters of governance.

“We therefore enjoin Rivers people and well-meaning Nigerians to discountenance the spurious and fake report as Governor Fubara at no time contemplated and/or directed such needless order of shutting down the economy for any reason.”

Investors King reported that a Federal High Court in Abuja on Wednesday, restrained the Central Bank of Nigeria (CBN) from releasing monthly allocations to the Rivers State Government.

The judge, Joyce Abdulmalik, in a judgement, held that the receipt and disbursement of monthly allocations since January 2024 by Governor Siminalayi Fubara of Rivers State is a constitutional somersault and aberration that must not be allowed to continue.

Abdulmalik submitted that the presentation of the 2024 budget by Fubara before a four-member Rivers State House of Assembly was an affront to the constitutional provision.

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