In a week heavy with data and the regular meeting of the RBA Board, there will be keen interest in the retail trade data for August. Making up close to one-quarter of GDP, trends in retail sales have an important influence on the strength of the economy.
Retail spending has been dealing with a series of conflicting pressures. On the positive side is the solid growth in employment, the wealth effect from the house price boom and ongoing low interest rates which should be helping the cash flow of debtors and boosting spending.
On the downside is the record low wages growth which is crimping incomes, the still high levels of underemployment and broader cost of living pressures associated with electricity prices and other essentials. For householders, there is not a lot of spare cash to add to retail turnover growth. Last month, retail sales disappointed with a flat outcome, and the market consensus is a moderate rebound in spending.
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