A man carries several shopping bags as he walks along George Street in Sydney’s central business district (CBD) Australia, February 5, 2018. REUTERS/Daniel Munoz
March 7, 2019
By Swati Pandey
SYDNEY (Reuters) – Australian retailers suffered another bleak month in January, pointing to a tepid start for the new year after economic momentum slowed last quarter.
Retail sales rose 0.1 percent in January, figures from the Australian Bureau of Statistics (ABS) showed on Thursday, picking up from a shock 0.4 percent decline the previous month but missing expectations for a 0.3 percent increase.
The Aussie dollar went as low as $0.7020 in the aftermath of the data.
The currency was already nursing losses from the previous day when gross domestic product (GDP) figures showed Australia’s $1.3 trillion economy slowed sharply in the second half of last year.
The soft number increases the risk that economic growth in the first quarter will remain weak, and adds pressure on the central bank to ease policy. Household spending accounts for around 57 percent of Australia’s annual GDP.
“After yesterday’s disappointing GDP print there was no real relief in the retail turnover figure for January,” said Sarah Hunter, chief economist for Australia at BIS Oxford Economics.
“This is broadly in line with the underlying pace of growth seen over the last three months, and suggests that while conditions for households haven’t worsened significantly, they also haven’t improved.”
Consumer spending has been weighed down by record-high household debt and sluggish wage growth, one reason investors believe the Reserve Bank of Australia (RBA) could now consider cutting interest rates from an all-time low of 1.50 percent.
Calls from some analysts for the RBA to ease policy this year have intensified after Wednesday’s GDP data.
Futures markets predict a full 25-basis-point cut in October, a remarkable turnaround from just a couple of months ago when investors were positioned for a rate hike.
Thursday’s figures showed consumers chose to eat out and spend on food in general rather than splurging on new clothes, shoes or household goods. New South Wales, of which Sydney is the capital, was the best performing state in January.
Worryingly, online sales plunged 23 percent in original terms in January, after rising a meager 2.2 percent in December.
Less saving and weak spending has already slowed hit some of Australia’s biggest businesses.
Grocers Coles Group Ltd and Woolworths Group Ltd had disappointing sales in the half to Dec. 31; sales are down at electronics retailer Harvey Norman Holdings Ltd; and, on Wednesday the country’s biggest department store chain, Myer Holdings Ltd, posted its fifth consecutive half-year drop in revenue.
Separate data showed Australia’s exporters were enjoying boom times as the country’s trade surplus swelled beyond all expectations to A$4.5 billion ($3.16 billion) in January, the second highest on record.
That was far above the A$3.0 billion forecast and owed much to a surge in gold exports, which more than doubled. In all, exports jumped 5 percent in January from the previous month, and were up 16 percent from a year earlier.
(Reporting by Swati Pandey; Editing by Kim Coghill)