SYDNEY: Australian retail sales eased more than expected in December after a barnstorming couple of months, but still posted a smart rebound in the final quarter of 2017 in a positive sign for household consumption and economic growth.
Thursday’s figures from the Australian Bureau of Statistics (ABS) showed retail sales eased 0.5 percent in December, from November when they rose a solid 1.3 percent led by Black Friday discounts. Economists polled by Reuters had predicted a 0.2 percent fall.
The local dollar eased about 20 pips to $0.7868 on the weaker-than-expected monthly number. Household goods led the falls with department stores, clothing, footwear, cafes and restaurants all posting losses.
The revival greatly improved the outlook for gross domestic product growth, given household spending accounts for around 57 percent of annual economic output. In the third quarter, household consumption had expanded at its slowest pace since 2008, marring an otherwise respectable annual growth outcome of 2.8 percent.
Consumer spending has been under pressure from record-high household debt and sluggish wage growth, one reason the Reserve Bank of Australia (RBA) is in no rush to raise interest rates from record lows. The RBA is all but certain to keep rates at 1.50 percent at its first meeting of 2018 on Tuesday.
Other data out Tuesday showed Australia recorded a trade deficit of A$1.36 billion ($1.07 billion) in December, confounding forecasts of a A$200 million surplus. However, November’s result was revised sharply to show a surplus of A$36 million, from an initial deficit of A$628 million, in part reflecting updated prices for iron ore and coal.
Analysts noted that prices climbed further in December, suggesting that the month’s export earnings would also be revised higher at a later date.
The other main surprise in the trade report was the strength of imports, which jumped 6 percent in December.
While surging oil prices accounted for some of that, there were also solid increases in consumer and capital goods which augured well for consumption and investment.
