Retail sales fell in December

Retail sales fell in December according to the ABS.

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The Australian Bureau of Statistics (ABS) released its monthly retail sales figures today and it doesn't make for great reading, particularly on top of today's market crash.

According to the ABS, seasonally adjusted retail sales fell by 0.5% in the key December month, confirming some unofficial reports that the retail sector was struggling to generate revenue up to Christmas.

Some sources in the retail industry said that sales picked up just before Christmas, meaning that the first few weeks of December were even worse than the reported 0.5% decline.

Many commentators and shoppers were surprised that Amazon's launch had such little impact after its large build-up, it is probably too early to count the retail chickens on that front.

It will be very interesting to see what JB Hi-Fi Limited (ASX: JBH), Harvey Norman Holdings Limited (ASX: HVN), Wesfarmers Ltd (ASX: WES) and Woolworths Limited (ASX: WOW) report later this month.

Drilling down into the different retail categories, some of the best performers in trend terms in December 2017 were food retailing which went up by 0.3%, cafes, restaurants and takeaway food services rose by 0.4% and clothing, footwear and personal accessory retailing rose by 0.5%.

South Australia, Victoria were the best performing states for trend growth whilst Northern Territory was the worst performer.

Foolish takeaway

These weak Christmas figures are a clear sign that some households out there are doing it tough. Discretionary spending, such as retail, is often the first to get cut out of a household's budget when things get tight.

I find it a little worrying that retail sales are falling even though there are services out there such as Afterpay Touch Group Ltd (ASX: APT) which are temporarily increasing demand.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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