Pedestrians pass by shops at the Queen Victoria Building in Sydney, Australia, Friday, July 26, 2024.
Lisa Marie Williams | Lisa Marie Williams Bloomberg | Getty Images
Australian retail sales posted their biggest increase in 10 months in November as Black Friday discounts lured cost-conscious shoppers, but even that fell short of forecasts that consumer demand would remain weak.
Analysts also suspect additional demand only starts over Christmas.
The data are unlikely to be seen as an obstacle to a rate cut, with markets betting the Reserve Bank of Australia could ease policy in February. 0#AUDIRPR
Data released by the Australian Bureau of Statistics (ABS) on Thursday showed that retail sales increased by 0.8% in November compared with October, after a revised increase of 0.5% in October. Analysts had expected a 1.0% gain in November.
The Australian dollar fell 0.3% to $0.6199 after the data was released.
Sales rose 3.0% from a year earlier to A$37.1 billion (US$23 billion), with ABS pointing out that promotions now cover the entire month of November, not just the Black Friday weekend.
Sales at department stores rose 1.8% this month, while spending at cafes and restaurants increased 1.5%.
Ben Udy, chief economist at Oxford Economics, said: “The continued growth in Black Friday sales in Australia means that the Australian Bureau of Statistics’ seasonal adjustment cannot effectively capture the strong seasonal momentum.”
“This makes it extremely difficult to understand the underlying strength of consumption from these data, as strong growth may be offset by a contraction in sales in December.”
Last year, sales fell sharply in December as consumers mostly spent early to take advantage of Black Friday sales.
Slowing inflation and steep income tax cuts have boosted sales prospects to some extent. However, the pick-up in consumer spending so far has been disappointing, which is why the central bank unexpectedly turned dovish last month.
For more than a year, the Reserve Bank of Australia has kept interest rates stable, believing that the cash rate, which has risen from a historical low of 0.1% during the epidemic to 4.35%, is restrictive enough to control inflation within the target range while maintaining employment growth.
A drop in core inflation on Wednesday led markets to ramp up bets on a rate cut in February. Swaps imply a 60% chance of such a move occurring, while futures imply a 78% chance.
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