SYDNEY Jan 10 Australian shoppers tightened
their purse strings in November after three months of splurging,
but retail sales were still running well ahead of the previous
quarter and pointing to a much-needed pick up in consumer
Data from the Australian Bureau of Statistics (ABS) out on
Tuesday showed retail sales grew a disappointing 0.2 percent in
November from October when they increased 0.5 percent.
However, sales in October and November put together were 1.5
percent faster than the first two months of the previous
quarter, bolstering hopes the economy had turned around after
contracting in the July-Sept period.
The ABS's experimental estimate of online retail sales also
jumped 10.8 percent in November, enjoying a fourth month of
solid gains to top A$1.1 billion for the first time.
"The strong start to the quarter means real consumption
growth probably still rebounded in the fourth quarter," said
Kate Hickie, economist at Capital Economics.
She estimates December quarter retail sales growth at 1.3
percent, compared with 0.7 percent in September quarter.
"That would be welcome, given the outright fall in real GDP
in the third quarter. It would provide more hope that Australia
avoided its first recession in 25 years in the fourth quarter."
Household consumption accounts for 56 percent of annual
economic output, versus the less than 9 percent produced by
Australia's emblematic mining industry.
Figures out last week showed Australia boasted its first
trade surplus in almost three years in November as surging
commodity prices boosted export earnings, and likely economic
growth as well.
Tuesday's data will provide some relief to the Reserve Bank
of Australia (RBA) which has been counting on a pickup in
household consumption to offset weakness in mining investment.
The RBA has been playing down the need for further easing
following cuts last August and May that took the cash rate to an
all-time low of 1.5 percent.
As a result, financial markets had all but given up on the
chance of a further rate cut <0#YIB:> and were even toying with
the idea of a hike in 2018.
The latest signs show that consumers entered the New Year in
a mood to spend. A survey by ANZ and Roy Morgan out on Tuesday
showed sentiment surged in the first week of January, with
consumers much more upbeat about their finances and eager to buy
"This is a reasonable indicator of consumer spending,
suggesting a solid Christmas and holiday spending period
is underway," said ANZ senior economist Jo Masters.
"It is encouraging that households' views on future finances
are in a strong upward trend, likely supported by a solid labour
market and rising house prices."
(Reporting by Swati Pandey; Editing by Eric Meijer)