October is turning out to be a bit of a quandary for economists, investors and others.
I know its only early days, there's only a smattering of figures, but yesterday two important indicators: retail sales and building approvals, showed signs of weakness
This was on top of the record trade deficit for October of $2.98 billion, plus surprises in the fall in new private capital spending in the September quarter, a drop in corporate profits in the same period, and a bigger than expected rise in business inventories.
Economists were more than a little mystified and pointed out that a slow down in mining profits, mining exports and sluggish mining investment were factors in these surprises, along with the impact of the drought and the higher Australian dollar.
But yesterday the Australian Bureau of Statistics revealed that retail sales grew 0.2% in October over March. That compared to a revised 0.7% (0.8% originally) rise in September and a 0.8% rise in August.
Economists had been looking for a 0.6% rise in retail sales, especially as anecdotal reports from the likes of David Jones, JB Hi-Fi and Harvey Norman told of better than forecast sales growth in the month, and into November.
So they fell short on this indicator, raising the question if the economy was perhaps running a bit slower than thought.
Economists trotted out the usual collection of speculation of an interest rate rise and the Federal election, but the fact remains that reports from the frontline told of very solid sales; especially in goods were the higher Australian dollar had helped lower prices. That includes Consumer Entertainment, IT and travel.
Sales of recreational goods retailing jumped 7.0% in October followed by clothing and soft goods with a 2.7% rise. (That would be good news for the likes of Rebel, now owned by private capital and Super Cheap Auto's, BCF chain which is growing rapidly. increase.
The largest fall was in household goods retailing, with a 1.8% decline with food retailing off just 0.2%.
And to complicate matters, the ABS reports retail sales in original terms, which is what the retailers actually work off.
They showed a different picture in October.
"Australian turnover increased by 7.7% in October 2007 compared with October 2006. Chains and other large retailers increased by 9.0%, while 'smaller' retailers increased by 6.1%," the ABS wrote.
That compares to a 7.3% rise in the September 2007, compared to September 2006, so there was an apparent strengthening in original terms.
South Australia has the best performance: a 1.6% rise in retail sales in the month, while sales dipped in the boom states of Western Australians (down 0.8%) and Queensland, (off 0.1%).
