Australian retail sales rose less than economists forecast in April as weaker spending at department stores partly offset higher outlays on clothing and footwear.
Sales climbed 0.2 percent to A$21.9 billion ($21 billion) from a month earlier, when they fell 0.4 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 0.3 percent gain.
Reserve Bank of Australia Governor Glenn Stevens and his board slashed borrowing costs by 2 percentage points over the past 20 months to 2.75 percent, joining global counterparts in embracing record-low rates to combat currency strength. The nation’s benchmark stock index has fallen in two of the past three months and the government in May projected a deficit of A$19.4 billion this fiscal year.
“Anecdotal reports suggest retail sales rose in April, although we expect growth to continue moderating,” Westpac Banking Corp. (WBC) economists led by Bill Evans, who predicted a 0.2 percent increase, said in a research report before the release.
The local dollar was little changed at 96.28 U.S. cents at 11:37 a.m. in Sydney.
Spending at department stores fell 2 percent, and household goods dropped 0.6 percent, today’s report showed. Consumers spent 1.8 percent more on clothing, footwear and personal accessories and 0.5 percent more on food, it showed.
“Growth in economic activity was still expected to be a little below trend this year,” the RBA said in minutes of its May policy meeting. “The near-term forecast reflected the slowing in overall business investment, given the peak in the mining investment boom along with the effects of fiscal consolidation and the high level of the exchange rate.”
Australia’s gross domestic product growth will slow to 2.6 percent in 2013, down from 3 percent projected in November, the Organization for Economic Cooperation and Development said in a May 29 report. With the economy slowing, the government’s “gradual approach” to reducing the public deficit is welcome, it said.
David Jones Ltd. (DJS), Australia’s second-largest department store company, reported last week that quarterly sales fell to an eight-year low, weighed down by competition and warm winter weather. Sales in the three months ended April 27 dropped 2.2 percent from a year earlier to A$391 million, David Jones said in a statement May 27, the lowest since the same quarter of the Sydney-based company’s 2005 financial year.
Australian consumer confidence slumped in May by the most in 17 months as a government announcement the budget would remain in deficit overshadowed low rates, a private report showed May 22.
To contact the reporter on this story: Michael Heath in Sydney at email@example.com
To contact the editor responsible for this story: Stephanie Phang at firstname.lastname@example.org