Australia’s retail sales growth exceeds expectations in October

Australia’s retail sales came in above expectations again in October, implying a better start to fourth quarter spending. Retail sales grew 0.5 percent in sequential terms in October, as compared with the market expectation of a rise of 0.3 percent and September’s rise of 0.6 percent. Australia’s retail sales are expanding at an annual rate of 3.5 percent.

Within the headline print, food sales were up a solid 0.6 percent sequentially, whereas household goods sales grew strongly by 0.7 percent following a rise of 2.6 percent in September. The volatile department store category dropped 1.9 percent, whereas weakness in clothing sales stayed, falling 0.4 percent in the month.

The widespread nature of the improvement in sales in the recent months is encouraging. Sales in NSW rose 6.9 percent on a three month annualized basis, whereas sales in Queensland and Victoria rose 9.1 percent each. Unsurprisingly, sales growth continues to be weak in WA at 1.8 percent, although this is considerably up from -1.4 percent rate three months ago.

For the Reserve Bank of Australia, the upside surprise in retail sales would be welcome news, given the series of disappointing data over the last month. This implies that growth in household spending has increased and that the loss of momentum in the Australian economy in the third quarter is expected to be temporary, noted ANZ in a research report.

At 03:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was bearish at -72.3508, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bearish at -53.6205. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex