Australia | Dec 03 2009
By Chris Shaw
Australian economists got it right with their forecast for retail sales for October, the nominal number recording a 0.3% increase in line with expectations. The outcome is a reversal from the 0.2% decline recorded in September, with Commonwealth Bank economist James McIntyre pointing out retail sales growth has largely flat-lined in recent months as the underlying drivers of spending have remained weak.
In year-on-year terms sales are now up by 5.6%, ANZ Banking Group senior economist Julie Toth suggesting one point of interest this month was the growth recorded in the more volatile and discretionary sectors of the market. Toth points out department store sales for the month were solid, while the cafe/restaurant/takeaway food sector also did better and overall this sector is up 13.6% from year ago levels.
The disappointment in the numbers according to Westpac senior economist Matthew Hassan was in household goods, which rose just 0.1% for the month. Normally at this stage of the economic cycle this measure would be posting larger gains, though as Hassan notes this could be a timing issue given the activity in housing markets is only just starting to feed through to new construction activity levels.
With the number meeting expectations Hassan notes there has been little reaction from the Australian dollar, with the general outlook still for the currency to move higher given an improved risk appetite in Asia on news Bank of America intends to repay its TARP money.
While levels around US93.00-93.20c should offer some resistance Westpac suggests a move through here could signal further gains back to recent highs around the US94.00c level. ANZ’s Toth notes today’s number contains no significance for the interest rate outlook as the Reserve Bank of Australia has already lifted rates this month and doesn’t meet again until February of next year.