Australian retail sales up 16.3% in May

Australian retail sales surged 16.3% in May to $4.03 billion. This is the largest month-on-month rise in 38 years. The …

Pile of sporting equipment against a white background

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Australian retail sales surged 16.3% in May to $4.03 billion. This is the largest month-on-month rise in 38 years. The release by the Australian Bureau of Statistics showed a surge in sales right across the retailing industry. This is good news for retail ASX shares and the broader economy. 

However, does this mark a turning point that ASX retailers had been dreaming about? Let's begin with a dive into the impact on retail shares and the economy.

Impact on retail ASX shares

Wesfarmers Ltd (ASX: WES) will benefit as hardware, building and garden supplies, clothing, electronic goods and footwear experienced large increases in sales. This is good news for its Bunnings, Target, Kmart and Officeworks brands. 

Similarly, JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN) will benefit from sales increases in household goods. Products such as furniture, floor covering, houseware, textile goods, electrical and electronic goods saw an increase in turnover. 

In addition, there is positive news for supermarkets owned by Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Metcash Limited (ASX: MTS) with food retailing rising solidly. 

Impact on the economy

A rise in retail sales is good news for the broader economy as it illustrates consumers are feeling more optimistic about their finances. Government intervention in terms of Jobkeeper and Jobseeker could also explain the spark for retail sales. Increased foot traffic to retailers is also marked by the easing of restrictions. Also, strong retail sales is a positive development for jobs in the industry.

Does this mark a turning point for Australian retail?

Many retailers are hoping so. Unfortunately, the 16.3% increase in May follows a 17.7% fall in April.  More light will be shed on whether there is a recovery playing out in the industry as retail data is released over the coming months.   

The shift in how we work and study could also explain the surge in retail sales.  Working and studying from home has prompted a sharp rise in demand for office-related furniture and equipment. Furthermore, the reduction in time travelling to work meant we have more time to do DIY projects at home. This may shift with a return back to the office.

While the strong rebound in retail sales is excellent news for the ASX retailers mentioned above, cautious optimism is needed. Jobkeeper has an estimated expiry date of September which will be a hit to consumers discretionary income and Jobseeker payment is set to revert back to levels pre-crisis. As a result, the consumer's optimism may quickly evaporate and tighten their wallets. 

Motley Fool contributor Matthew Donald owns shares of Harvey Norman Holdings Ltd. and Wesfarmers Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Wesfarmers Limited, and Woolworths Limited. 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 Scott Phillips.

More on Retail Shares

A woman looks at a tablet device while in the aisles of a hardware style store amid stacked boxes on shelves representing Bunnings and the Wesfarmers share price
Retail Shares

Why today is a big day for Wesfarmers shares

Why is everyone talking about Wesfarmers shares today?

Read more »

Woman checking out new iPads.
Retail Shares

JB Hi-Fi share price lifts off on strong start to FY 2025

JB Hi-Fi held its AGM today and released its first quarter trading update.

Read more »

Two woman shopping and pointing at a bargain opportunity.
Retail Shares

Why I think this ASX 200 stock is a top buy right now

I’m bullish about this stock with global potential.

Read more »

Two happy woman looking at a tablet.
Retail Shares

Guess which ASX All Ords stock just reported a 21% revenue jump

The ASX All Ords stock has had a strong start to the new financial year.

Read more »

a fashionable older woman walks side by side with a stylish younger woman in a street setting as they both smile at something they are talking about.
Retail Shares

Why I'd start buying ASX retail shares now rather than waiting for 2025

Is it time to act before it’s too late?

Read more »

A young well-dressed couple at a luxury resort celebrate successful life choices.
Retail Shares

I'd invest $10,000 into these excellent ASX shares for the long-term

I love finding ASX growth shares that have a compelling future with good potential earnings growth. I want to invest…

Read more »

Woman with headphones on relaxing and looking at her phone happily.
Retail Shares

Up 112% in a year, why is this ASX 300 stock rocketing again today?

Investors are sending this ASX 300 stock soaring again today. But why?

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Retail Shares

What can owners of Wesfarmers shares expect from next week's AGM?

What may Wesfarmers say at the upcoming annual general meeting (AGM)?

Read more »