Jul 4, 2019
Wary Australian shoppers slow down May retail growth
Jul 4, 2019
Australian retail sales disappointed yet again in May and job vacancies fell from record highs, adding to signs of an underpowered economy and raising the prospect of a third rate cut this year by the nation’s central bank.
Thursday’s data from the Australian Bureau of Statistics (ABS) showed retail sales rose a pedestrian 0.1% in May after falling 0.1% April, and below analysts’ forecast of a 0.2% gain.
Weak department store sales, food retailing and clothing contributed to the bleak outcome and point to another quarter of slow economic growth after momentum eased in the second half of 2018.
That builds the case for a third rate cut this year and piles pressure on the country’s newly re-elected government of Prime Minister Scott Morrison to provide more aggressive fiscal support.
Financial markets are pricing in a near 90% chance of a cash rate cut to 0.75% before Christmas. With another 25-basis-point easing already in the price, the local dollar barely moved at $0.7037.
Australia’s A$1.9 trillion ($1.3 trillion) economy, which has dodged a recession since the early 1990s, has hit a soft patch in the past year pressured by a combination of a long property market slump, weak consumer spending and slackening global demand.
Those pressures have kept inflation low and pushed up unemployment to an eight-month high.
The Reserve Bank of Australia (RBA) responded to the series of sub-par economic data by cutting rates twice since June to an all-time low 1.00%, ending a record spell of unchanged policy since August 2016. Many analysts believe yet more stimulus is needed.
“The expected ongoing weakness in retail sales and increasing evidence that the labour market is softening is consistent with our view that the RBA will cut rates again in November and February ultimately taking the cash rate down to just 0.5%,” said AMP chief economist Shane Oliver.
Separate data from the Australian Bureau of Statistics (ABS) also out on Thursday showed the number of job vacancies fell 1.1% in the three months to May from the previous quarter, the first decline since February 2016.
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