Australian Retail Sales Little Changed in June; Aussie Declines
Australian retail sales were little changed in June as consumers spent less on books and sports equipment in an economy grappling with a weaker outlook.
Sales were flat from a month earlier at A$21.8 billion ($19.3 billion) from a month earlier, when they gained a revised 0.2 percent, the Bureau of Statistics said in Sydney today. The result compares with the median forecast in a Bloomberg News survey of 21 economists for a 0.4 percent gain.
Traders are pricing in a more than 90 percent chance Reserve Bank of Australia Governor Glenn Stevens and his board will cut rates by a quarter percentage point tomorrow to a fresh record of 2.5 percent, after lowering borrowing costs by 2 percentage points between November 2011 and May. Prime Minister Kevin Rudd yesterday called an election for Sept. 7, saying the campaign against opposition leader Tony Abbott will center on economic management as a China-driven resources boom wanes.
“Households aren’t responding to rate cuts the way they traditionally have,” Katrina Ell, an economist at Moody’s Analytics in Sydney, said before the report. “Retailers are struggling as households continue to pay down debt rather than markedly increase discretionary spending.”
Spending on other retailing that includes books fell 1.1 percent, and consumers spent 0.2 percent less on clothing and footwear, today’s report showed. They spent 0.9 percent more at cafes and restaurants, it showed.
The local dollar fell, trading at 88.58 U.S. cents at 11:35 a.m. in Sydney from 88.80 cents before the release.
Retail sales, adjusted to remove inflation, were little changed in the three months through June from the previous quarter. Economists had forecast a 0.1 percent decline.
Government data showed last month that Australia’s core inflation remained below the midpoint of the central bank’s 2 percent to 3 percent target in the second quarter compared with a year earlier.
“We have been saying recently that the inflation outlook may afford some scope to ease policy further if needed to support demand,” Stevens said in a July 30 speech. “The recent inflation data do not appear to have shifted that assessment.”
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