Australia’s Stalling Retail Sales Spur Bets for Interest-Rate Cut: Economy

Australian retail sales unexpectedly stalled in November, ending four months of gains and pushing the nation’s currency to a one-week low as traders increased bets that the central bank will cut interest rates.

Sales were little changed from a month earlier, when they rose 0.2 percent, the Bureau of Statistics said in Sydney today. The result compares with the median forecast (AURSTSA) in a Bloomberg News survey of 20 economists for a 0.4 percent gain.

Weaker consumer spending may broaden the scope for Reserve Bank of Australia Governor Glenn Stevens to lower the nation’s benchmark rate again after quarter percentage-point cuts on Nov. 1 and Dec. 6. Stevens has joined counterparts from Brazil to Belgium in loosening monetary policy as Europe teeters near a recession, weighing on sentiment and clouding the outlook for global growth.

“It was a disappointing result,” said Michael Turner, an economist at RBC Capital Markets Ltd. in Sydney. “We don’t expect a bounce in December either given the early part of the month was soft from what we understand.”

The Australian dollar touched $1.0146, the least since Dec. 30, before trading 0.6 percent lower at $1.0166 as of 2:17 p.m. in Sydney. The local currency bought $1.0179 before the data. The so-called Aussie has fallen in four straight trading days, its longest slide since mid-November.

Spending on other retailing, a category that includes recreational goods and books, rose 0.3 percent, and consumers spent 0.1 percent more at cafes and restaurants, today’s report showed. They spent 0.4 percent less on clothing and footwear, and 0.1 percent less at department stores, it showed.

Food Shops

Sales at food and household goods retailers were unchanged from October.

Asian stocks fell today for a third day, while the euro and oil retreated before German Chancellor Angela Merkel and French President Nicolas Sarkozy meet to develop rescue plans for the euro over the next three months.

The MSCI Asia Pacific Index excluding Japan lost 0.9 percent as of 10:39 a.m. in Hong Kong. The euro fell to an 11- year low against the yen and weakened to the least in nearly 16 months versus the dollar. Gold slid 0.6 percent, while oil decreased 0.5 percent.

China’s lending and money supply growth in December exceeded economists’ estimates, signaling monetary conditions may be easing as the nation’s central bank said it must be prepared for possible shocks from the U.S. and Europe.

China Lending

New loans totaled 640.5 billion yuan ($101 billion) for the month, exceeding the estimates of all 18 economists surveyed by Bloomberg. M2, a measure of China’s money supply, rose 13.6 percent, compared with the 12.9 percent median of 18 estimates.

Elsewhere in the region, Taiwan’s export growth accelerated to 3.7 percent in December from 1.3 percent a month earlier, according to the median of nine estimates in a Bloomberg News survey before a report later today.

Earlier, a government report showed New Zealand’s trade deficit widened in November as crude oil and fertilizer purchases bolstered imports, even as exports gained for a third straight month. Imports exceeded exports by NZ$308 million ($240 million), from a revised NZ$228 million deficit in October, Statistics New Zealand said in Wellington.

In Europe today, reports may show Germany’s exports rose 0.5 percent in November from the previous month, while industrial production in the region’s largest economy likely fell 0.5 percent in the same period, according to economists surveyed by Bloomberg.

French Trade

France’s trade deficit may have narrowed in November to 6 billion euros ($7.6 billion) from about 6.3 billion in October, another survey of economists showed.

Switzerland’s jobless rate was 3.2 percent in December compared with 3.1 percent in November, economists surveyed by Bloomberg said before a State Secretariat for Economic Affairs report. The country’s retail sales probably rose 0.2 percent in November from a year earlier, according to a separate survey.

In the U.S., consumer borrowing probably rose by $7 billion in November, compared with a $7.64 billion gain the previous month, according to the median estimate of economists surveyed before the Federal Reserve releases the figures today.

Australia lowered the nation’s benchmark rate to 4.5 percent from 4.75 percent on Nov. 1, the first reduction since April 2009, and eased further to 4.25 percent the following month. Futures traders are betting Stevens will cut again next month as Europe’s sovereign-debt crisis intensifies.

‘Intense Competition’

Harvey Norman Holdings Ltd. (HVN), Australia’s biggest electronics retailer, said in October that sales fell in the three months through Sept. 30. It cited the strength of the local currency and “intense competition” for the weakness.

Australia’s jobless rate rose in November to 5.3 percent from 5.2 percent, as employers cut 6,300 jobs, according to a government report released Dec. 8.

Australia’s higher borrowing costs relative to other developed-world economies and the mining-investment boom helped drive the Australian dollar to $1.1081 on July 27, the highest since exchange controls were scrapped in 1983.

Europe’s fiscal troubles have weighed on the so-called Aussie in recent months. The world’s fifth most-traded currency fell 8.3 percent from that peak on concern Greece would default and trigger a repeat of the 2008 credit freeze that followed the collapse of Lehman Brothers Holdings Inc.

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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