Tuesday, May 22, 2018

© Reuters. A shopper runs past a window of a retail store displaying products and a sale sign in central Sydney© Reuters. A shopper runs past a window of a retail store displaying products and a sale sign in central Sydney

By Swati Pandey

SYDNEY (Reuters) – Australian retailers suffered another tepid month of sales as consumers, battling stagnant wages and rising utility bills, curbed spending in an outcome that augers poorly for third-quarter economic growth.

Thursday’s data from the Australian Bureau of Statistics (ABS) showed retail sales were flat in September, a big surprise given analysts had looked for a bounce of 0.4 percent following a shock decline in August.

Sales fell in nominal terms in July and August, yet adjusted for inflation they still rose 0.1 percent for the whole third quarter. Essentially, retailers sold more goods but got less money for them.

The Australian dollar skidded about 20 pips following the data to be down 0.3 percent at $0.7687, leaving behind a more than one-week high of $0.7729 set on Thursday.

Australia’s retail sector had shown some signs of life earlier in the year, but that recovery was short-lived as sluggish wages and household incomes sapped spending power.

Friday’s data implies a risk private consumption didn’t add much to overall economic growth in the September quarter. It also casts a shadow on the Reserve Bank of Australia’s (RBA) forecasts for the A$1.7 trillion economy to accelerate at a 3 percent pace over the next two years.

The RBA has long feared ballooning debt in Australia’s red-hot property sector was limiting consumers’ ability to spend elsewhere in the economy, one reason it has held rates at an all-time low 1.50 percent since August 2016.

The ABS figures showed hefty falls in the Northern Territory and Western Australia, with Tasmania and South Australia rebounding after losses the previous month.

In chain volume measures, household goods and department stores led the declines, while food and clothing inched higher.

In a sign of the times, Australia’s biggest department store operator Myer (AX:MYR) this week cut its growth targets after its quarterly sales fell 2.8 percent.

Other parts of the economy are in better shape.

Data out on Thursday showed dwelling approvals climbed to a seven-month high while Australia boasted its longest run of trade surpluses in over four decades.

sponsoredArticle = ‘div-gpt-ad-1466339494851-0’;