ABS hardware retail stats March 2023

The Australian Bureau of Statistics (ABS) has released stats for hardware retail turnover through to March 2023. HNN uses the trailing 12 months to March in analysing these stats, which are referred to as "periods". This means that, for example, p2019 refers to the timespan from April 2018 to March 2019.

As the main image for this article (Chart 1) indicates, overall sales for p2023 continued to trend upwards, marking what would seem to be another step change in overall revenues. For Australia, revenues increased by $1.06 billion to 25.571 billion, an increase of 4.3%.

In percentage terms, South Australia (SA) had the largest increase, of 16.6%, lifting by $241 million to $1730 million, followed by Western Australia (WA), up $198 million to $2741 million, an increase of 7.8%. Ranked in dollar terms, New South Wales (NSW) increased revenue by $332 million to $7787 million, up 4.5%. Queensland (QLD) gained $221 million, increasing by 4.3%. Australian Capital Territory (ACT) was up 6.0% or $30 million.

Only Victoria (VIC) showed negative growth, down by 0.24%, with a loss of $16 million in revenue.

New South Wales

Chart 2 shows a familiar pattern for hardware retail revenues in NSW.

A shorthand way to view the change in revenue structure, at least for NSW, is that the pre-2020 highs have become the post-2020 lows.

The most significant element of this graph is the strong kick up for March 2023. That echoes the kick for the three previous periods - p2020, p2021 and p2022 - but it is far more significant, as it comes after the Reserve Bank of Australia (RBA) has lifted interest rates with the goal of reducing this kind of activity.

The increase for March over the previous February percentages for NSW are:

2020: 17.4%

2021: 9.5%

2022: 10.2%

2023: 9.7%

Victoria

Chart 3 shows the kind of results the RBA would be happier with.

Where for p2023 NSW had only two months that were below p2022, VIC has six months below, with five in the second half of the period. The March 2023 result shows a modest upwards kick, shadowing the result for March 2021, despite the February 2023 revenues being stronger than the February 2021 revenues.

Queensland

Chart 4 for QLD bears more resemblance to NSW than VIC.

In fact, QLD has seen p2023 substantially outperform p2022, with only three months in p2023 underperforming p2022, while setting record highs in seven months. Again, there is the sharp upwards kick in March 2023, though it was not as high as for March 2022.

South Australia

Chart 5 for SA shows the state setting records for 11 months in p2023.

That said, performance in calendar 2023 has become somewhat muted with both February and March 2023 close to 2022 values.

Western Australia

As with SA, WA set new records in 11 months of p2023, as shown by Chart 6.

While these results are good, unlike other states the overall COVID-19 driven increase has not been as extreme as for other states, as WA achieved previous high records in p2017.

Australian Capital Territory

The ACT tends to be a little volatile in stats, due to its smaller size and unusual composition. Even with that, as Chart 7 shows, the territory more or less had a "best hits" p2023.

At the start of p2023, through to October 2022, p2023 follows the trend for p2021, then switches over to following p2022 for the rest of the year. The result is an overall record for revenue in this period.

Analysis

As Chart 8, for Australia overall shows, p2023 outperformed p2022 for 10 months, with the two underperforming months very close to p2022 in February and March.

It is almost a little shocking to see how mammoth the gap is between the post-COVID-19 periods and the pre-COVID-19 periods. Chart 9 shows the percentage gain over the three most recent periods.

As HNN covers elsewhere, it seems likely that one reason the RBA did increase interest rates in May 2023 was that sharp kick upwards for March 2023 figures - which repeats across most areas of housing, such as finance.

One thing to be aware of, in terms of business forecasting, is that the markets are at the moment experiencing more of the upside of changes brought about by COVID-19, with the downsides likely to begin showing up more midway through next financial year.

For example, houses have been valued upwards through trends such as work from home and the four-day workweek. Yet those trends will eventually have a profound negative effect on office spaces and urban areas.

The current attitude in most major capital cities is that it is better to retain relatively high office rental rates and accept higher vacancy levels. It's likely that by the end of FY2023/24 there will be a decline in office rents, which will flow through to a devaluation of those properties. It is, of course, possible to repurpose offices to residential uses, but this entails large investments. For example, modern office buildings typically do not offer the requisite access to external windows, which means constructing substantial light wells.

That said, arrangements such as work from home are, basically, far more efficient than transporting masses of workers to and from centrally located offices five days a week. Those efficiencies, however, will only appear over a much longer timescale, and potentially only begin to affect state economic planning at the end of the current decade.