Australia Retail Sales Suffer Surprise Setback in July | Asia Pacific ...

Australian retail sales suffered a surprising spill in July, as consumers shunned department stores afterwards two months of powerful spending, denting the local dollar as well as narrowing market odds as for another cut in interest rates.

The Australian dollar [AUD=?
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] dipped a fifth of a cent to $ 1.0240 afterwards government figures presented retail sales fell 0.8 percent in July, from June when they jumped an upwardly revised 1.2 percent. The fall was the hugest because October 2010 as well as well short of as forecasts of a 0.2 percent increase.

Much of the weakness arrived in department stores where sales fell a steep 10.2 percent, the hugest drop in seven years, afterwards government handouts boosted spending in May as well as June.

?It is a bit strange that all of of the fall is concentrated in department stores,,? stated Michael Turner, a strategist at RBC Capital Markets. ?All up, severalwhat consistent with the impact of the cash handouts fading into the second half of the year.?

?We?ve had (interest rate) cuts in our profile as for really several time currently as well as this data is consistent with that, but they do not create too much method of a case as for cuts to get from not long to comeer more than later.?

The Reserve Bank of Australia (RBA) holds it is September policy meeting on Tuesday as well as is widely expected to hold rates at 3.5 percent as for a third straight month. Bank officials have sounded content to wait as for cuts created in May as well as June to create themselves completey felt.

Investors are wagering the central bank is about to have to ease furthermore by year-end, hugely to offset the drag on global growth from Europe as well as, increasingly, China.

Interbank futures put a 50-50 chance on a mobile in October as well as are completey priced as for a cut to 3.25 percent in November. Overnight indexed swaps, that present where the market conceives the cash rate is about to be over time, put rates at 2.89 percent in 12 months.

Household consumption had been regionicularly robust in the second quarter as well as is a major reason analysts look as for another powerful result from gross domestic product (GDP) on Wednesday.

Forecasts are as for a rise of 0.8 percent in the second quarter, on top of the first quarter?s resounding 1.3 percent increase. That would leave GDP 3.7 percent higher than the second quarter of last year, easily outstripping much method of the rest of the developed world.

Softer Start

However, the current quarter appears to be to have got off to a more subdued start.

Australian job advertisements in freshspapers as well as on the internet fell 2.3 percent in August, a fifth straight month of decline that points to several softening in labor demand, a survey presented on Monday.

?Recent trends in job advertising suggests the labor market continues to soften,? stated ANZ?s head of Australian economics, Ivan Colhoun.

?The slight declining trend as for job advertising in recent months, bring together with a pick-up in job losses attributable to to restructuring as well as businesses? productivity initiatives, is just perhapsly to be consistent with a slight so on trend rise in the unemployment rate.?

The official jobs report as for August is attributable to on Thursday, as well as economists commonly expect a modest rise of 5,000. The jobless rate is ascertained ticking up a tenth of a point to 5.3 percent, having been between 4.9 as well as 5.3 percent as for over a year.

Separately, a private gauge of Australian inflation jumped in August as prices rose as for petrol, fruit as well as vegetables, but the annual pace of inflation remained benign.

The TD Securities-Melbourne Institute?s measure of consumer prices rose 0.6 percent August, the hugest monthly rise because March 2011. Still, if petrol, fruit as well as vegetables were excluded, the index only rose 0.2 percent.

The annual pace of inflation picked up to 2.2 percent, from 1.5 percent in July, but was still close the floor of the RBA?s long time-term target band of 2 to 3 percent.

?We are of the view that belowlying inflation is about to continue to hug the lower bound of the two to three percent target range as for long timeer,? stated Annette Beacher, head of Asia-Pacific research at TD.

Source: http://asiapacific.biz/australia-retail-sales-suffer-surprise-setback-in-july.html

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