The Australian economy suffered another blow with a major business survey stating that the retail sector is "clearly in recession".
Data from the NAB main bank comes a week after the central bank was forced to cut interest rates to the lowest level in history and data from the Australian Bureau of Statistics showed that the economy slowed to the weakest level since the financial crisis in 2009.
In figures released today, NAB's business conditions index fell two points in May, well below the long-term average.
Speaking about the NAB Economics podcast, NAB chief economist Alan Oster agreed with the proposal that the Australian retail industry was now "at the GFC terrible level."
"The retail is actually doing it hard and it's getting worse," he said.
The retail industry has undergone several business closures in the last two years, but Oster said conditions have deteriorated sharply in recent months.
"While the retail sector has lagged behind in other sectors for some time, the recent deterioration has seen conditions in the industry fall to levels not seen since the GFC," he said.
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"This suggests that the consumer remains highly cautious about anything but essential item spending due to slower income growth, high levels of debt and possibly some concerns about falling house prices."
Mr. Oster did not want to "overemphasize" the disgrace and gloom in the industry, but said that "the readings of -27, which we have in retail, are so bleak."
The numbers showed that consumers in Australia were reluctant to spend and the newly elected Morrison government would need to keep the promised tax cuts to boost the economy, Oster said.
In contrast, the company's confidence measure in the survey recovered seven points, taking it slightly above average.
However, associate professor of Queensland University of Technology and retail specialist Gary Mortimer, rejected claims that the industry was "clearly in recession," saying such statements were alarming for companies.
"Pointing to the recent launch of ABS retail sales in April, retail sales rose 0.2% in April," he told news.com.au.
"This follows an increase of 0.2 percent in March 2019 and an increase of 0.2 percent in February."
Buyers spent $ 27.3 billion in April, up from $ 26.5 billion in the same period last year.
Food retail rose 0.4% in April, boosted by the department store sector with rebates, which rose 0.2%
"However, footwear and clothing again suffered," said Mortimer.
"Certain sectors are clearly struggling – like clothing, footwear and accessories – but this category has been impacted by aggressive rebates and the influx of fast fashion international retailers."
The NAB survey's trading measure, or sales, fell five points, while profitability fell four points. The forward orders also fell by one point.
"Prospective indicators suggest that confidence jumping is likely to be short-lived and that conditions probably will not reverse early," Oster said.
One positive point was a three-point jump in the employment index, which pointed to some resilience in demand for labor after the official unemployment rate rose unexpectedly to 5.2% in April.
The RBA cited the need to reduce unemployment when it cut rates by 0.25 percentage points to 1.25 percent and said that it would not be reasonable to expect further easing ahead.