UPDATE 1-Australia retail sales, trade data point to solid Q1 growth
* Retail sales rise 0.2 pct in Feb, 10th straight month of gains
* Trade surplus tops forecasts at A$1.2 bln, exports to China strong
* Q1 shaping up to be a brisk quarter for economic growth
By Wayne Cole
SYDNEY, April 3 (Reuters) - Australian retail sales rose for the 10th straight month in February, government data showed, while the country boasted another sizable trade surplus as exports to China grew by almost a third compared to last year.
Thursday's data showed the economy was on track for a solid quarter of growth as low rates and rising household wealth boosted spending, while a decade of furious mining investment fuelled resource exports.
"The outlook for the trade balance has been well documented: persistent surpluses as mining production picks up and investment slows, said Michael Turner, a strategist at RBC Capital Markets.
Retail sales rose 0.2 percent in February to a record A$22.97 billion ($21.2 billion), a resilient performance given it followed a 1.2 percent surge in January. It was also the 10th straight month of increases, the longest such stretch since 2006/07.
The revival in sales is important as the A$270 billion retail sector accounts for 17 percent of Australia's A$1.5 trillion in annual gross domestic product (GDP) and is the second-biggest employer, providing 10 percent of all jobs.
Sales of household goods showed particular strength with gains of 2.0 percent in February and 1.8 percent the month before. That could be just an early sign of what is to come as a boom in home building stokes demand for homewares, furniture and appliances.
That virtuous cycle is exactly what the Reserve Bank of Australia (RBA) aimed to achieve when it cut interest rates a record low of 2.5 percent last year, and one reason it no longer sees a need to ease further.
At its April policy meeting this week the central bank said rates were likely to stay on hold for some time. Futures markets have priced out virtually any chance of a further cut <0#YIB:> and have a first hike pencilled in for early next year.
RBA Governor Glenn Stevens will have his own chance to react to the news when he gives a speech in Brisbane at 0250 GMT.
The central bank has also been optimistic that the massive investment on mining expansion will continue to lift export volumes and so support economic growth.
The effects were evident in monthly trade figures which showed the country ran a surplus of A$1.2 billion in February, topping analyst forecasts for $850 million.
Exports of fuels, mainly liquefied natural gas, rose a sharp 9 percent in the month and are set to surge over the next few years as major projects come on stream.
China remained the by far the biggest buyer of Australian goods with exports to the Asian giant up 32 percent on February last year at A$8.2 billion.
That will in turn help fill the hole left as mining investment cools. Net exports added 0.5 percentage points to GDP in the last quarter of 2013, and no less than 2.4 percentage points for all that year.
Imports were also up in February, mainly due to a 15 percent jump in capital goods, which hints at a possible improvement in business investment for the quarter. (Editing by Eric Meijer)
- Tweet this
- Share this
- Digg this
- Comedian Joan Rivers remains in serious condition at N.Y. hospital
- U.S. strikes have slowed Iraq militants but not weakened them - Pentagon
- UPDATE 4-Iceland says eruption over, lifts all airspace restrictions
- Ukraine seeks to join NATO; defiant Putin compares Kiev to Nazis
- Swedish carrier backs out as first Bombardier CSeries operator