8501.0 - Retail Trade, Australia, Sep 2013  
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FEATURE ARTICLE COVERAGE OF HOUSEHOLD FINAL CONSUMPTION EXPENDITURE


INTRODUCTION

The estimates of retail turnover presented in Retail Trade, Australia (cat. no. 8501.0) provide an important quarterly partial-indicator of Household Final Consumption Expenditure (HFCE) in the Australian System of National Accounts (ASNA).

Historically, Retail Trade estimates contributed 55-60% of HFCE in the expenditure side of Gross Domestic Product (GDP). However, this coverage of HFCE has fallen over time as household expenditure patterns have gradually shifted from goods to services. As a result, Retail Trade now contributes approximately 30% of quarterly estimates of HFCE.

This feature article discusses changes in household expenditure patterns over time and describes ongoing investigations to improve coverage of HFCE in this publication.


HOUSEHOLD FINAL CONSUMPTION EXPENDITURE

According to the ASNA, HFCE is defined as the expenditure incurred by resident Australian households on the consumption of goods or services, regardless of whether the expenditure is made within the domestic territory or by Australian residents abroad.

HFCE estimates are published quarterly in Australian National Accounts: National Income, Expenditure and Product (cat. no. 5206.0) and annually in Australian System of National Accounts (cat. no. 5204.0). The ASNA uses a classification system based on the Classification of Individual Consumption according to Purpose (COICOP) in order to classify the components of HFCE by purpose and function.

The ASNA uses HFCE benchmark data based on several sources. One of the main sources is data from Retail and Wholesale Industries, Australia: Commodities (RIS) (cat. no. 8624.0) whilst another key data source is the Household Expenditure Survey. Benchmark data is advanced using partial indicators of HFCE such as retail surveys, production data and other administrative data sources.

More detail on the compilation of HFCE is available from Australian System of National Accounts: Concepts, Sources and Methods (cat. no. 5216.0).


RETAIL TRADE - AN INDICATOR OF HOUSEHOLD EXPENDITURE ON GOODS

Retail Trade presents estimates of the value of turnover of 'retail trade' for Australian resident businesses from selected retail trade and food services industries, disaggregated by industry group, and by state and territory. Retail Trade estimates provide the most detailed sub-annual indicators of household expenditure for a range of HFCE categories specified in the ASNA.

Retail Trade estimates are the primary indicator for the following HFCE categories:

  • Food and non-alcoholic beverages
  • Clothing and footwear
  • Furnishings and household equipment
  • Goods for recreation and culture
  • Books, papers, stationery and artists' goods

Retail Trade estimates are also partial indicators for the following HFCE categories:
  • Alcoholic beverages
  • Health
  • Catering
  • Other goods and services

During the compilation of the National Accounts, HFCE estimates which use Retail Trade estimates must be adjusted to remove expenditure by non-resident households within Australia (which are exports) and add in expenditure by Australian residents abroad (which are imports).


CHANGES IN HOUSEHOLD EXPENDITURE PATTERNS

Retail Trade's coverage of total household expenditure on goods and services has fallen over time as household expenditure patterns have gradually shifted from goods to services. Figure 1 shows the falling contribution of HFCE categories for which Retail Trade is a primary indicator relative to the contribution of the remaining HFCE categories since the beginning of the ASNA HFCE time series in 1960.

Figure 1: Relative contribution to HFCE
Graph: Figure 1: Relative contribution to HFCE


All HFCE categories for which Retail Trade is a primary indicator have fallen in their relative contribution to total HFCE. The largest falls in HFCE share were observed in Food, Clothing and Furnishings and household equipment. These categories collectively represented 38% of total HFCE in 1960, falling to 18% in 2012. Food represented the largest share of Australian household expenditure for a number of decades, representing 18% of total HFCE in 1960. This has fallen to approximately 10% in 2012, with Food now the second largest share of total household expenditure.

Conversely, the share of total HFCE has risen for expenditure on services and other categories which are currently outside the scope of Retail Trade. The largest rises in HFCE share were observed in Imputed rent for owner-occupied housing, Education services, Recreational and cultural services, and Communication services. The collective contribution of these categories to total HFCE has risen from 10% in 1960 to 27% in 2012. Imputed rent for owner-occupied housing now represents the largest share of total HFCE with a relative contribution of 15%.


IMPROVING COVERAGE OF HOUSEHOLD FINAL CONSUMPTION EXPENDITURE

The ABS is currently investigating opportunities to improve the coverage of HFCE in this publication, with a focus on services and other categories which are outside the scope of Retail Trade. Opportunities under investigation include the expansion of the existing Retail Business Survey, the development of a new quarterly collection and/or the use of related transactional and administrative datasets.

A number of HFCE categories have been the focus of investigations because they could potentially be included in this publication but currently have limited data sources available for estimating HFCE on a quarterly basis. Categories selected for the development of primary indicators include Electricity, gas and other fuel; Communication services and Other services. Categories selected for the development of partial indicators include Transport services, Recreational and cultural services and the Operation of vehicles.

The expansion of coverage has commenced with the establishment of two new quarterly collections: the Survey of Consumer Sales - Energy Retailing and the Survey of Consumer Sales - Communications Services. The Energy Retailing survey commenced in June quarter 2012 with the aim of providing new estimates of the value of sales of electricity and gas to consumer customers. The Communications Services survey commenced in December quarter 2012 with the aim of providing new estimates of the value of sales of mobile, fixed line and fixed internet services to consumer customers.

When included in this publication, these first two stages of expansion will collectively increase coverage of HFCE by approximately 5%. Additional opportunities to increase coverage by a further 15% are still under investigation, including the potential for further expansion of the quarterly Survey of Consumer Sales, and/or alternative data sources such as the use of transactional and administrative datasets.


EXPERIMENTAL ENERGY RETAILING ESTIMATES

Experimental estimates of the value of sales of electricity and gas to consumer customers are now included in the appendix of this publication, along with an explanation of the collection methodology. The experimental estimates for June quarter 2012 and onwards are currently available in original current price terms only. Seasonally adjusted and trend estimates are planned to be published in upcoming issues, as are the first experimental estimates of consumer sales of communication services.


SUMMARY

Retail Trade, Australia (cat. no. 8501.0) provides an important quarterly partial-indicator of Household Final Consumption Expenditure (HFCE) in the Australian System of National Accounts (ASNA). However, Australian household expenditure patterns have changed over time, with expenditure shifting from goods to services. As a result, coverage of HFCE provided by Retail Trade has fallen gradually over time from historical levels of 55-60% to approximately 30% today.

To improve upon existing data sources available for the measurement of HFCE, and improve this publication's coverage of HFCE, the ABS is conducting ongoing investigations into the potential expansion of the existing Retail Business Survey, the development of new quarterly collections and/or the use of alternative data sources such as transactional and administrative datasets.

Since the June quarter 2012, the new quarterly Survey of Consumer Sales has been established to provide new indicators of household expenditure on categories currently outside the scope of Retail Trade, with a focus on consumer sales of electricity, gas and communication services.

Improvement of the coverage of this publication is being implemented in a staged approach. The first experimental estimates of consumer sales of electricity and gas are included in an appendix to this publication.