Australian Retail Sales Rose Less Than Forecast in August
Australian retail sales advanced at half the pace economists forecast in August as weaker demand at household-goods outlets and restaurants offset a rebound in spending at department stores.
Sales climbed 0.2 percent to A$21.5 billion ($22 billion) from a month earlier, when they fell 0.8 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 0.4 percent gain.
Spending has been supported by four interest-rate reductions -- totaling 1.25 percentage points from November to June -- as Reserve Bank of Australia Governor Glenn Stevens sought to buttress the economy. He lowered the benchmark borrowing cost by a further quarter percentage point this week to 3.25 percent to revive consumer demand in a nation with a savings rate above 9 percent and where employers unexpectedly cut payrolls in August.
The report “just reflects the financial conservatism in the country with people saving more and more worried about the security of their jobs,” said Hans Kunnen, chief economist at St. George Bank Ltd. in Sydney. “Retail sales are soft and wouldn’t stand in the way of another cut” by the RBA, he said.
Consumers spent 1.5 percent less on household goods, and cafes and restaurants dropped 0.9 percent, today’s report showed. Spending at department stores surged 6.9 percent, and consumers spent 0.4 percent more at food shops, according to the figures.
The local dollar, which has fallen 1.7 percent since the end of September, traded at $1.0205 at 12:43 p.m. in Sydney from $1.0215 before the release.
Resource investment to meet Chinese demand and foreign investment funds seeking a haven have spurred gains in the nation’s currency, which closed above parity with the U.S. dollar for all but 23 days this year.
Stevens said in the statement accompanying his Oct. 2 rate reduction that the mining boom may crest at a lower level than previously expected and the employment outlook is weaker.
“The peak in resource investment is likely to occur next year, and may be at a lower level than earlier expected,” he said. “As this peak approaches it will be important that the forecast strengthening in some other components of demand starts to occur.”
A separate government report today showed home-building approvals advanced for the third time in four months in August on apartment projects.
The number of permits granted to build or renovate houses and apartments gained 6.4 percent from July, when they fell a revised 21.2 percent, the report showed. The result compares with the median forecast for a 4.7 percent gain in a Bloomberg News survey of 20 economists.
Approvals to build private houses fell 0.5 percent to 7,314 in August from the previous month, the report showed. Approvals for apartments and renovations advanced 23 percent to 4,596.
The data “highlight a sluggish consumer and weak housing construction market,” said Su-Lin Ong, head of Australian economic and fixed-income strategy at RBC Capital Markets in Sydney. “The data are consistent with our view that the economy is moving to a sub-trend pace of growth in the second half and supports further easing from the RBA.”
Traders are pricing in about a 73 percent chance the RBA will cut rates again at its policy meeting next month, swaps data compiled by Bloomberg show.
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