Australian shoppers splurge in boost to retailers, economy
* Feb retail sales +0.8 pct vs +0.2 pct consensus
* Feb rise highest since November 2017
* Trade surplus jumps to a record high of A$4.8 billion
(Adds economist comments, updates A$ reaction)
By Swati Pandey
SYDNEY, April 3 - Australian retailers enjoyed their best
sales in February since late-2017 in a boon to economic growth
in the first quarter, signalling surprising resilience in
household consumption and sending the local dollar higher.
Retail sales climbed 0.8 percent in February, figures from
the Australian Bureau of Statistics (ABS) showed on Wednesday,
picking up from an unexpectedly weak 0.1 percent growth in
January and well past expectations for a small 0.2 percent rise.
February's outcome was the best since November 2017 with
sales fairly broad-based across food, department stores and
"A very solid outcome that gives the Reserve Bank some
reassurance that household spending could bounce back in Q1
2019," said Kaixin Owyong, Sydney-based economist at National
"There may be some price impacts at play – food sales were
unusually strong – but these data give the RBA room to remain on
Consumer spending has been a major concern for the Reserve
Bank of Australia (RBA) over the past year as households battle
high levels of debt, slow pace of wage growth and a downturn in
the country's once-booming property market.
The data provided a much needed confidence boost about the
health of Australia's household sector, sending the Aussie
dollar more than a third of a U.S. cent higher
to$0.7100. The Aussie was last up 0.3 percent at $0.7093.
The currency was earlier nursing losses from the previous
day after RBA held interest rates steady at a record low 1.50
percent but managed to sound dovish to some.
February's strong number reduces the risk of another weak
quarter of economic expansion after gross domestic product data
for the quarter ended December came in surprisingly softer at
Household spending accounts for around 57 percent of
Australia's annual GDP.
To help Australians tide over snail-paced wages growth and
high debt, the country's conservative government on Tuesday
announced sweeping tax cuts and offered cash handouts to some.
That might also provide some timely support for Australia's
struggling retail sector as weak spending has hit some of the
country's biggest businesses. Earlier this week, top grocer
Woolworths said it will shut about a sixth of its
loss-making discount department stores over the next three
Its rivals Kmart and Target - owned by Wesfarmers -
aren't doing much better either as they reported declining
Economists expect Tuesday's budget measures will likely lift
consumer sentiment and spending. TD Securities analyst Annette
Beacher said the "targetted fiscal stimulus" in the budget -
which includes A$15 billion worth of tax cuts over 2021/22 -
negates the need for the RBA to ease policy for now.
Separate data showed Australia's exporters were enjoying
boom times as the country's trade surplus swelled beyond all
expectations to A$4.8 billion ($3.4 billion) in February and
owed much to a surge in iron ore exports. Economist had forecast
a surplus of A$3.8 billion.
The upbeat trade and retail sales figures should also
provide some relief to policymakers worried about a slowdown in
China, Australia's major export market.
($1 = 1.4104 Australian dollars)
(Reporting by Swati Pandey and Wayne Cole;
Editing by Shri Navaratnam)
First Published: 2019-04-03 03:12:04
Updated 2019-04-03 04:14:52
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