Yesterday’s rise in retail sales and dip in new job ads won’t have any impact on the thinking at the Reserve Bank board meeting later today. Interest rates will not move.
Figures from the Australian Bureau of Statistics on Monday showed retail sales rose 0.4% last month, in line with market forecasts and up from that surprise 0.1% fall in December.
The figures showed sales of clothing, footwear and personal accessories fell 0.4% while department stores sales fell 0.5%. The January retail sales rise was driven by strong 1% plus gains in household goods (1.4%, after a poor December) in December and cafe/restaurant sales (up 1.1%).
The AMP’s chief economist, Dr Shane Oliver says that “After a couple of soft months the January bounce in retail sales tells us that consumers have started the year on a reasonably solid note auguring well for March quarter consumer spending.”
"While 3.1% annual retail sales growth is soft compared to the past it largely reflects depressed retail price inflation so volume growth is not so bad.
"Looking forward retail sales are likely to be supported by surging dwelling completions this year which should support sales of household goods, reasonable jobs growth and low interest rates but record low wages growth and an eventual fading of the wealth effect as the Sydney and Melbourne property markets slow will act as constraints.
“Retail sales growth remains solid in NSW (+3.2% yoy), Victoria (+3.8% yoy) and South Australia (4.5% yoy) but remains weak in WA at just 1% yoy.
“With commodity prices up from their lows and export volumes ramping up and the mining investment unwind getting close to the bottom retail sales growth in WA should bottom out this year,” Dr Oliver wrote yesterday.
Meanwhile the ANZ job ads survey showed a small fall in February.
Job advertisements fell 0.7% in February, after recording a solid 3.9% rise in January and up 6.9% in the past year (7.1% in the year to January).
“Some moderation in job ads is not unexpected given the strong January result and may reflect the tricky nature of seasonal adjustment at this time of the year,” said ANZ head of Australian economics, David Plank in yesterday’s release.
"Looking ahead, strength in business conditions, firms’ profitability and an increase in capacity utilisation all point to an improvement in labour market conditions in our view," he added. "Overall, we expect the unemployment rate to slowly edge downward through 2017."
