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Aussie retail sales throw up pleasant surprise

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Australian retail sales grew strongly in August as household wealth touched record highs and unemployment edged lower – signs that activity might pick up in coming months.

Retail sales rose 0.4%, data from the Australian Bureau of Statistics on showed on Wednesday. That was double the 0.2% markets had been looking for and the biggest gain for seven months.

The central bank was cautious on household spending when it held rates at a record low of 1.5% earlier this week, having cut them in August and May.

The question now is whether one month’s rosy data can become a sustainable trend. Capital Economics doubts it.

According to its analysts, “The soft start to the third quarter still means that even if retail sales rose by 0.4% again in September, real consumption growth in the third quarter probably wasn’t stronger than the subdued 0.4% (quarter-on-quarter) rise in the second quarter”.

“So a sizable rebound in real consumption growth in the second half of the year seems unlikely.”

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Paul

The author Paul