Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Australian Retail Sales Surge as Economy’s Recovery Builds

Economic IndicatorsNov 25, 2021 23:10
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

(Bloomberg) -- Australian retailers recorded their best month of sales in nearly a year as consumers splashed out on everything from dining out to clothing, taking advantage of the easing of protracted lockdowns and building momentum in the economy for the final quarter.

Sales surged 4.9% in October from a month earlier, when they rose 1.3%, and more than doubled economists’ forecast of a 2.2% gain, Australian Bureau of Statistics data showed Friday. That was the biggest rise since November 2020.

“Australians coming out of lockdown have well and truly hit the pavement, ditching the loungewear, refreshing their wardrobe and heading out to enjoy cafes and restaurants,” said Jo Masters, chief economist at Ernst & Young LLP. The result “is yet another sign that the economy is roaring back,” she said.

 

Strong consumer spending, together with high job vacancies and firms boosting investment intentions help explain why markets believe the Reserve Bank’s first interest-rate increase is only a matter of months away. Traders are pricing in an initial 15 basis-point hike to take the cash rate to 0.25% in May and then at least two more quarter-point increases over the rest of 2022.

The central bank is also optimistic about the outlook for the A$2 trillion ($1.4 trillion) economy, predicting a brisk 5.5% expansion next year. But it sees price pressures taking longer to build, with core inflation only expected to reach the 2.5% midpoint of the RBA’s target in late-2023. 

That’s a key reason why Governor Philip Lowe has repeatedly dismissed aggressive market pricing and signaled the tightening cycle is only likely to begin in about two years’ time.

“It looks like a sharp rebound is unfolding in the fourth quarter,”  said Andrew Ticehurst, a rates strategist at Nomura Holdings (NYSE:NMR) Inc. in Sydney. He reiterated his view that the RBA’s first rate hike will come in November 2022, while bringing forward his expectation on the timing of the central bank ending quantitative easing to May from August previously.

The RBA will review its bond buying program -- currently running at A$4 billion a week -- at its Feb. 1 meeting. 

Some economists see the potential for the bank to scrap the program altogether in February, particularly with the Federal Reserve expected to begin scaling back its asset purchases at a faster pace as it contends with escalating U.S. inflation.

Friday’s retail sales data also showed:

  • Clothing, footwear and personal accessory retailing soared 27.7% and cafes restaurants and takeaway food services jumped 12.3%
  • Food retailing was the only industry to fall, declining 0.5%
  • Sales in New South Wales state recovered strongly, surging 13.3%, Victoria climbed 3% and the ACT jumped 20.2%

Consumer spending accounts for a little over half of Australia’s annual economic output and as a result it is an important indicator for policy makers.

(Adds comments from economists.)

©2021 Bloomberg L.P.

Australian Retail Sales Surge as Economy’s Recovery Builds
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email