Australia's retailers enjoyed another jump in sales in October, an outcome that augers well for momentum in consumer spending going into the all-important Christmas shopping period. The 0.5 percent rise for October beat market forecasts for a 0.3 percent uptick and marked the best three month period for sales since mid-2014. That was welcome news after a run of disappointing figures this week suggested the economy had all but stalled in the third quarter.
The robust numbers will help allay concerns about the risk of a more marked slowdown, or even recession, following weak numbers on business investment and construction. Friday's data should also provide comfort to the Reserve Bank of Australia (RBA), given the retail sector has annual sales of A$290 billion ($220 billion) and is the country's second-biggest employer with 1.25 million workers.
"It's a very solid result. It highlights that there has been a lift in overall activity. It's positive for inflation and for the economy as a whole," said Savanth Sebastian, economist at CommSec. "The outlook for the retail sector is certainly better than it was six months ago and the Reserve Bank will be quite comfortable with these results."
The Australian economy grew a brisk 3.3 percent in the year to June, but faces the risk of a contraction last quarter for the first time in almost six years. Data from the Australian Bureau of Statistics (ABS) out on Thursday showed sharp cutbacks in business investment while other indicators of domestic activity such as wages growth and employment have been feeble.
Core inflation is already at a record low of 1.5 percent and looks like staying under the RBA's target band of 2-3 percent for some time. "This retail sales data is probably more forward looking than the recent indicators we've had. From that perspective, it looks like the economy is still doing relatively okay," Sebastian added.
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