Oct. 1 (Bloomberg) -- Australian retail sales advanced faster than economists forecast in August, led by a rebound in spending at department store as interest-rate reductions encouraged consumers.
Sales climbed 0.4 percent to A$21.9 billion ($20.4 billion) from a month earlier, when they rose 0.1 percent, the Bureau of Statistics said in Sydney today. The result compares with the median forecast in a Bloomberg News survey of 22 economists for a 0.3 percent gain.
Traders are pricing in almost no chance Reserve Bank of Australia Governor Glenn Stevens and his board will cut rates today after lowering borrowing costs by 2.25 percentage points between November 2011 and August. Consumer confidence rose 4.7 percent last month and home prices climbed 3.7 percent across Australia’s eight major cities in the three months through September, according to private reports.
“Households are feeling more confident about future economic conditions, helping loosen purse strings,” Katrina Ell, an economist at Moody’s Analytics in Sydney, said before the report. “The lively residential property market is an added lift to discretionary spending, given that homes are typically a household’s largest asset.”
Spending at department stores jumped 6.4 percent after declining 7.9 percent a month earlier. Consumers spent 0.4 percent more at cafes and restaurants, today’s report showed. They spent 0.6 percent less on household goods, it showed.
The local dollar traded at 93.32 U.S. cents at 11:34 a.m. in Sydney from 93.21 cents before the release.
Woolworths Ltd., Australia’s largest retailer, increased profit at the fastest pace in five years as it opened on average one grocery store every five days. Net income rose 24 percent to A$2.26 billion in the year ended June, it said Aug. 28.
“The easing in monetary policy since late 2011 has supported interest-sensitive spending and asset values, and further effects can be expected over time, including from the declines in rates seen over recent months,” Stevens said in a statement Sept. 3 after leaving rates unchanged at 2.5 percent. “The pace of borrowing has remained relatively subdued, though recently there are signs of increased demand for finance by households.”
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