Sydney: Australian retail sales rose in January, rebounding from the biggest decline in 10 months and adding to signs of an economic recovery that prompted the central bank to boost borrowing costs yesterday.
Sales advanced 1.2 per cent from December, when they fell a revised 0.9 per cent, the Bureau of Statistics said yesterday. The median forecast of 19 economists surveyed by Bloomberg News was for a 0.5 per cent increase.
Consumer spending is stoking earnings at companies including Woolworths, Australia's biggest retailer, and may strengthen the nation's economy, one of the few to skirt last year's recession.
Reserve Bank Governor Glenn Stevens boosted the benchmark lending rate by a quarter point to 4 per cent yesterday.
"Retail sales are strong, there's no question about it," said Adam Carr, a senior economist at ICAP Australia Ltd in Sydney.
"It adds to the case for the Reserve Bank to hike rates to get on with the job of normalising things, and to do so quickly."
The Australian dollar rose to $0.89 (Dh3.26) at 11.57am in Sydney from $0.8984 cents just before the report was released. The two-year government bond yield fell one basis points to 4.59 per cent. A basis point is 0.01 percentage point.
Spending at department stores rose 7.2 per cent, the biggest gain in 10 months, and clothing sales advanced 2.9 per cent, yesterday's report showed.
Consumers spent 3.1 per cent less at cafes and restaurants.
Woolworths said last week that first-half net income increased 11 per cent to A$1.1 billion on increasing profitability at its supermarkets.
Harvey Norman Holdings Ltd, Australia's largest furniture and electronics retailer, said on February 26 that first-half profit rose 60 per cent on domestic demand for televisions.
Emboldened by an unemployment rate almost half that in the United States and Europe, Australian consumers are showing signs of weathering increased borrowing costs.
Consumer spending accounts for more than half the Australian economy.
Trend-setter
Governor Stevens led the world when he boosted the central bank's benchmark lending rate on December 1 by a quarter point to 3.75 per cent, adding to similar moves in November and October.
Australia has emerged from the global financial crisis "better than most," Stevens said on Monday, helped by "a strong macroeconomic environment".
Gross domestic product probably rose 0.9 per cent in the fourth quarter from the previous three months, when it gained 0.2 per cent, according to the median estimate of 18 economists surveyed by Bloomberg.
"If anyone is going to boom, surely it's Australia. We never really went into a recession at all," Gerry Harvey, chairman of Harvey Norman, said in a February 26 interview.
