Australia Retail Sales Unexpectedly Fall on Weak Household Goods
Australian retail sales unexpectedly declined for the first time in four months in November as consumers spent less on household goods and clothing in an economy with a weaker employment outlook.
Sales dropped 0.1 percent to A$21.5 billion ($22.6 billion) from a month earlier, when they were unchanged, the Bureau of Statistics said in Sydney today. The result compares with the median forecast for a 0.3 percent gain in a Bloomberg News survey of 15 economists, none of whom predicted a decline.
The data underpins Reserve Bank of Australia Governor Glenn Stevens’s decision to make five rate reductions -- totaling 1.75 percentage points from November 2011 to December -- as he seeks to buttress a slowing economy. The benchmark rate is at 3 percent, matching a half-century low, as policy makers seek to stimulate industries outside of mining, where investment is expected to peak this year.
“This is a worry because it suggests that the Reserve Bank’s rate cuts aren’t yet getting traction with households,” said Joshua Williamson, Citigroup Inc.’s senior economist in Sydney. “It suggests the central bank has some further work to do despite the fact that the global backdrop has improved.”
Spending on household goods fell 0.9 percent, and consumers spent 0.6 percent less on clothing and footwear, today’s report showed, while food retailing was unchanged. They spent 1 percent more at other retailing outlets, a category that includes news agents and florists, it showed.
The local dollar traded at $1.0489 at 11:41 a.m. in Sydney from $1.0517 before the release. The yield on 10-year Australian government debt slipped to 3.38 percent from 3.42 percent yesterday.
A separate government report today showed job vacancies in the three months to November declined 6.9 percent.
General Motors Co. (GM)’s Holden unit said in November it will cut about one in 13 jobs at its main plant in Adelaide, South Australia, as the strong local currency and increased car imports crimp sales.
Ford Motor Co. (F) said in July that it would offer as many as 440 severance payouts at its Australian division, while Toyota Motor Corp. said in January 2012 it would cut 350 jobs, about 10 percent of the workforce at its main plant.
Metcash Ltd., Australia’s largest grocery wholesaler, in November cut its full-year earnings forecast amid a price war with larger supermarket chains.
Metcash has been squeezed as competition between Australia’s two largest supermarket chains, Woolworths Ltd. (WOW) and Wesfarmers Ltd (WES).-owned Coles, has driven grocery discounts. A push to sell milk at A$1 a liter contributed to a 27 percent profit fall at the dairy and drinks division of Kirin Holdings Co.’s Lion unit, the company said in August.
“Households are pessimistic about the prospects for the economy, jobs and house prices, which is prompting them to shut their wallets,” Matthew Circosta, an economist at Moody’s Analytics in Sydney, said before the release. “Lower interest rates have failed to boost consumer confidence.”
The central bank lowered borrowing costs by a total of 50 basis points late in 2011 and a further 125 basis points in May, June, October and December to help stimulate the economy as a mining investment boom crests.
Resource investment to meet Chinese demand and foreign investment funds seeking a haven have spurred gains in the nation’s currency, which has stayed above parity with the U.S. currency for more than six months, its longest stretch above that threshold on record.
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