New four year lows for the Aussie dollar overnight as the currency’s slow decline continues, much to the relief of the Reserve Bank and despite some reasonable retail sales and trade account figures for October.
They join the solid building approvals figures for October released earlier in the week
The dollar dropped under 84 US cents early on, rose back above it when the retail and trade data emerged, and then eased in the afternoon to hit a low of 83.79, the lowest for four years. It was trading around this level in Asia this morning.
Figures from the Australian Bureau of Statistics showed that retail sales rose a seasonally adjusted 0.4% in October, after rising 1.3% in September, which was revised up by 0.1% from the original report.
As well, the trade figures showed another deficit, but it was an improvement on the September figures, helped by a weaker local currency which boosted export income and seems to have trimmed imports to some degree.
But it was the retailing figures, better than the market had been expecting, which took the eye as Australians continued to spend more on household items, electronics, clothing and footwear in October.
The ABS said there was a 1.4% rise in turnover on household goods such as furniture and appliances, and a 1.1% rise in spending on clothing, footwear and personal accessories. Across all categories retail sales were up 5.7 per cent for the 12 months to the end of October. Department stores sales were also solid with a 2% gain.
Retail sales momentum remaining solid
Source: ABS, AMP Capital
The growth was higher than the 0.1% increase expected by the market which had bene punting on a big fallaway in the month after September’s unusually strong rise, which was put down to the launch of the iPhone 6 models by Apple.
The worst-performing category in October was cafes, restaurants and takeaway food services, which slumped 2.1% as it has been one of the most consistently solidly performing sectors in the past six yerars.
ANZ economics analysts said in a note that sales of electronic goods including the iPhone 6 continued to drive turnover, posting a “surprising” 1.6% rise after the 9.4% surge in September.
Excluding electronics, retail sales growth was still a solid 0.3% for the month.
The AMP’s chief economist, Dr Shane Oliver wrote yesterday:
"Clearly the combination of low interest rates, gains in household wealth and new home completions are helping offset soft consumer sentiment and news of rising unemployment.
“The reversal of the “two speed” economy is also clearly evident in the retail sales data with NSW shooting the lights out with 9.8% growth in retail sales over the year to October and Victoria solid at 6.1% growth, but Western Australia now languishing with just 2.7% growth over the same period."
Meanwhile the October trade data showed a rise in exports and a fall in imports.
The trade deficit fell to -$1.3 billion from -$2.2 billion in September as exports rose 1.5% and imports fell 1.8%.
Dr Oliver says that if this keeps up “Trade may be setting up for another positive contribution to GDP growth in the December quarter.
“However, note that the 10% slump in iron prices in November is yet to impact and so the 4% gain in iron ore exports seen in October won’t be sustained.”
