Australia's Retail Sales Boost Weaken Hopes for RBA Rate Cut
After three months of decline, Australian consumers went out to dine and shop in July providing a boost to the country's retail and services industries.
Australia's shoppers were enticed to troop back to the malls in July as the country's retail sector recorded a 0.5 percent growth and exceeding expectations, data from the Australian Bureau of Statistics indicated.
Although there is still a lot to recover, analysts are surprised by the numbers, which according to BellFX general manager Nicholas White had exceeded the prediction of a 0.2 percent rise in sales for July.
Sales in New South Wales had picked up after a five-month drop, the Australia Bureau of Statistics showed. Thursday's retail data showed consumers increased spending by 1.2 percent at department stores in July and 1.1 percent at cafes and restaurants. Food retailing sales increased 0.8 percent in the month.
''Today's result was a good month but given the size of the falls we've seen this year and the long downward trend retailers need more than one good month to recover,'' ANZ senior economist Julie Toth told the Sydney Morning Herald.
Nonetheless, expectations of a rate cut when the Reserve Bank meets on Sept. 5 now diminish with the release of this new data.
According to CMC markets analyst Ben Taylor, Australian retail sales "accelerated the market higher and improved the prospects of the heavily beaten up retail sector. Private capital expenditure for the June quarter increased 4.9 percent beating the 4 percent expected rise."
"The result confirms the strong Australian investment across building and construction," Mr Taylor added.
Private new capital spending on buildings and equipment in Australia rose 4.9 percent to A$33.82 billion in the second quarter of 2011 from A$32.24 billion in the first quarter, the statistics data indicated.
Although Australia proved to be resilient during the global recession of 2009, the economy, as Reserve Bank Governor Glenn Stevens last week called is undergoing a "structural adjustment". The economic growth in Australia as brought by the biggest mining boom in more than a century drives the nation's currency to a record that also hurt exporters and local industries.The country's unemployment rate last month went up for the first time since October 2010, government data showed.