Retail sales aren't getting carried away

RETAIL sales grew 0.4% in November, in line with our expectations and those of the market.

It followed a relatively strong 0.6% outcome in October and suggests that retail spending maintained its pick-up in momentum following a soft period in the first half of 2015. Sales were up 4.3% over the year.•

An improved labour market appears to be sustaining sales but soft wage growth is keeping a lid on spending. 

An aversion to additional credit card debt remains in place with no growth in 'other personal' credit report by the RBA for November.

Spending remains firm in sectors associated with housing activity while sales of clothing, footwear and personal accessories continues its roller coaster ride.

There remains scope for consumers to lift spending in 2016, given the high rate of household savings and the recent rise in jobs.  However, this would require a sustained lift in consumer confidence.

We continue to expect retail spending will grow at a moderate pace during the year ahead.

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