MNI DATA IMPACT: Australia Retail Sales Bounce In August

By Lachlan Colquhoun

     LONDON (MNI) - MNI 5 THINGS. Australian retail sales rebounded in August,

but still came up short of analyst expectations. Sales were up a seasonally

adjusted 0.4% month on month in August, rebounding from an unchanged result -

after revisions - in July. 

     The market had been expected 0.5%, so while the result was positive there

was still some disappointment. The Government has touted its tax cuts as a major

initiate to revitalise the economy, but there are signs that consumers are

saving rather than spending these refunds.

September's retail sales results will be a further test of this, with the

Australian Taxation Office paying out an extra A$3.2 billion worth of net funds

in tax returns in the nine weeks to September 3. 

     Other points of note from the Australian Bureau of Statistics data.

     RBA's "gentle" recovery story 

The Reserve Bank of Australia has begun to talk about signs of a

"gentle"recovery in the economy as rate cuts, the housing market recovery and

infrastructure spending have an impact. The RBA cut rates this week for the

third time in five months, and official rates now stand at a record low 0.75%.

Any recovery, however, will have to be more than "gentle" to prevent another cut

early next year. 

Household goods sector still positive 

The household goods sector has suffered as house prices have fallen, but was in

positive territory again in August and up 0.1% after rises in the last three

months.   Any ongoing rebound in house prices could flow through to the retail

market for housing goods as people feel the "wealth" effect and as turnover

increases and people move homes.

     Cafes, restaurants and take-way food 

Spending in this sector has featured strongly in overall retail sales but moved

into negative territory, falling 0.1% in August. There have been some high

profile failures in the restaurant sector, which is also under attack for

systemic underpayment to workers. 

     Department store doldrums continue 

Department store sales were again hit, down 0.1% after falls in the previous

three months. One major retailer closed a flagship store this week as the

ongoing decline of department stores continues around Australia. 

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com