After the dismal 0.1% decline in retail sales in Australia last December, the nation was able to recover for the January retail sales by 0.4%, as most of its industries, states, and territories saw growth. Analysts attributed the better retail sales for the start of the year to a better spending in volatility rather than longer-term trend expenses.
On Monday the Australian Bureau of Statistics reported Australia’s January Retail Trade data which saw a seasonally adjusted retail sales increase in January of $25.73 billion, up by 0.4%, and in line with analysts’ expectations. The increase in January’s data follows a 0.1% decline from the previous month due to lower-than-expected demand during the holiday season, and a 0.1% increase in November.
For the year-on-year comparison of trend terms, Australian turnover increased 3.2%, while the trend estimate for January 2017 climbed 0.2%, a 0.3% increase in December 2016, and a 0.3% increase in November 2016.
Retail by industry saw more growth under the household goods retailing by a 1.4% increase, followed by cafes, restaurants and takeaway food services by 1.1%, food retailing by o. 2%, and other retailing by 0.1%. However, these growths were slightly offset by the decline in the clothing, footwear and personal accessories retailing sector by 0.4% and with the department store sales down by 0.5%.
ABS attributed the strong growth in household goods to a rise in electrical and electronic goods industry subgroup, which climbed 2.4%, while the hardware, building, and garden supplies retailing subgroup saw a 1.1% increase, while the Furniture, floor coverings, Houseware and textile goods retailing rose 0.5%.
For the total retail sales by state, Australian Capital Territory saw more growth by 1.2%, followed by the Victoria State at 1.1% increase, South Australia at 0.6%, Tasmania 0.4%, Western Australia 0.3%, New South Wales 0.2%, and Queensland remained unchanged, while the Northern Territory fell 0.8%.
Although the growth during the month gave a positive start for Australia, analysts still believe that if the retail activity of the nation only continues with a 0.4% increase for every month for the entire first quarter of the year, the government would still struggle with the consumption growth. In addition to that, a slow wage growth and employment growth poses a threat to overall yearly economic growth
Meanwhile, the Reserve Bank of Australia is expected to release a new monetary policy on Tuesday. The country’s interest rate is currently at 1.5% and speculated by most economists to remain the same for the whole year, despite the lagging wage growth and inflation rates below the central bank’s target.
Australian currency status
The Australian dollar opened lower against the US dollar at 0.7596 but was able to recover within the day after the release of the January Retail trade data. Last week, AUD lost almost 1% starting the week (Feb 27) at 0.7673 and falling to 0.7543 on Friday (Mar 03).
Upon the time of writing, AUD started surging once more in the market, climbing to 0.7603 0939 GMT. In previous releases of retail trade data, the Australian has also been affected by the government data, with the November 2016 data helping the dollar get a boost due to strong sales, and December 2016 data driving the AUD on a downward trade due to 0.1% decrease.
Although there are still several other economic indicators and factors in the currency price movement in the forex market, it still proves that release of the country’s various economic performance data impacts its currency in the market.
For the technical indicators summary, AUD still got a ‘Strong Buy’ summary from most analysts for time periods 5 mins, 15 mins, and hourly basis, but received a ‘Strong Sell’ for daily traders seeing that the currency is still very vulnerable at the moment.
The Australian benchmark index ASX 200 closed 0.29% or $16.91 higher to $5746. 51 after the release of the January retail sales data.
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