UPDATED July 11: Australia released new employment data Thursday that showed larger job gains than expected as mining companies expanded to meet Chinese demand for commodities. Employers hired 29,800 workers following May’s 25,600 decline.
After writing about the economic slowdown in Europe yesterday, I thought I should see what’s happening in Australia, another crucial territory for the action sports industry.
A key measure of the consumer mood was released yesterday. The Westpac Melbourne Institute Index of Consumer Sentiment in July fell to the lowest level since January, 1992.
Economists at Westpac Banking Corp., which publishes the index, believe the main culprit for consumers’ downbeat attitude is high fuel prices. Australia also saw its first fall in employment in 19 months in May, data that was announced in June.
On the retail front, Westpac reports 2008 has seen a sharp turnaround in retail conditions with sales volumes falling 0.1% in the first quarter.
Retail sales are forecast to grow 2.3 percent in 2008 and 2.4 percent in 2009.
Here’s Westpac’s assessment of the Australian retail climate:
“Retailers face a very challenging year on all fronts. Calendar 2007 saw profits lifted by rising sales, improved margins and well contained costs. In contrast, 2008 will see weakening demand, weakened pricing power and rising costs. The ability to control labour costs in particular is likely to be a distinguishing feature for retail performance. At this stage, 2009 is shaping up to be just as challenging.”
For action sports brands, there is a bright spot, however. While consumer sentiment is bleakest for those with mortgages, the mood is brighter for 18-24 year olds, retirees and low income households.
Overall, Westpac believes total gross domestic product in 2008 will grow 3.4 percent in 2008 after a strong 5.9 percent increase in 2007.
In 2009, gross domestic product is expected to grow 1.8 percent
