Already a Bloomberg.com user?
Sign in with the same account.
Australian retail sales advanced more than economists forecast in May on stronger spending at restaurants and department stores, sending the local dollar to a two-month high as traders pared bets on an interest-rate cut.
Sales climbed 0.5 percent to A$21.3 billion ($22 billion) from a month earlier, when they rose a revised 0.1 percent, the fifth straight monthly gain, the Bureau of Statistics said in Sydney today. Sales in April were previously reported to have dropped 0.2 percent. The May result compares with economists’ forecast in a Bloomberg survey for a 0.2 percent gain.
The longest stretch of retail sales increases since 2010 may encourage Reserve Bank of Australia Governor Glenn Stevens to extend this week’s rate pause after 75 basis points in reductions in May and June. Policy makers are trying to support confidence that has weakened among consumers who are saving, even as Australia recorded its best January-to-May period of hiring in five years.
Spending “was concentrated in the discretionary segment, adding to the overall strength of the report,” said Celeste Tay, a Singapore-based economist at 4cast Ltd. Excluding food retailing, which accounts for 40 percent of the total and fell for the first time this year, retail sales rose by “a more robust 0.9 percent month-on-month,” she said.
Sales at cafes and restaurants jumped 1.4 percent in May from a month earlier, and consumers spent 1 percent more at department stores, today’s report showed. They spent 0.1 percent less at food retailers, it showed.
After the report, the local dollar reached $1.0320 in Sydney, the highest level since May 3. Traders are pricing in a 52 percent chance Stevens will hold the benchmark rate at 3.5 percent for a second straight month in August, up from 43 percent yesterday, according to swaps data compiled by Bloomberg.
Sales in May were strongest in regions of the country where the biggest resources boom since the 1850s is occurring, today’s report showed. Sales were up 1.6 percent in Northern Territory and 1.1 percent in Western Australia, where companies including BHP Billiton Ltd. (BHP) and Woodside Petroleum Ltd. (WPL) are extracting iron ore and natural gas.
A strong currency has helped contain import prices and costs for consumers. A private gauge of Australian inflation released this week dropped in June on weaker fuel and furniture prices, signaling little cost pressure on consumers in the second quarter.
Australia unexpectedly added 38,900 workers in May, and annual economic growth of 4.3 percent in the first quarter was the fastest pace since 2007, government reports showed in the past month.
Tay said she is cautious about the outlook for retail because the nation’s job market is likely to come under pressure.
“Unemployment expectations and perceptions of year ahead family finances remain in recessionary territory,” she said. “Prolonged financial market turbulence, global macroeconomic uncertainty -- due to the ongoing euro-zone crisis and looming U.S. fiscal cliff -- softening asset prices and job insecurity are all headwinds to consumption in the period ahead.”
Woolworths Ltd. (WOW), Australia’s largest retailer, projects annual online sales will reach A$1 billion by the end of 2014 as consumers shift to buying through websites and smartphone applications.
Woolworths is tapping an increase in website shopping in Australia, where online spending rose 37 percent to A$12.3 billion last year, according to Commonwealth Bank of Australia. (CBA)
To contact the reporter on this story: Michael Heath in Sydney at firstname.lastname@example.org
To contact the editor responsible for this story: Stephanie Phang at email@example.com