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[SYDNEY] Australian retail sales posted a second month of solid growth in September, while spending for the whole third quarter made moderate gains amid subdued price pressures.
Official data issued on Wednesday showed that while prices for Australia's key resource exports were weak it was selling a lot more of them. This rebound in export volumes likely means economic growth accelerated last quarter after a worrying slowdown in the second quarter. "It looks like net exports will make a very handy contribution of around 1 percentage point to GDP growth," said Tom Kennedy, an economist at JPMorgan. "So GDP growth is looking OK for a rebound in the quarter."
That would be a welcome development for policymakers, especially since the second-quarter's meagre 0.2 per cent rise in gross domestic product (GDP) had prompted much media talk of recession.
The Reserve Bank of Australia (RBA) cited economic "green shoots" when keeping interest rates steady at 2 per cent at its November policy meeting this week.
That optimism led investors to scale back the chance of a policy easing in December, though the central bank did note that subdued inflation allowed room for a move if needed.
Interbank futures 0#YIB: imply a around a 32 per cent probability of a cut next month, but that rises to over 80 per cent in February. (The RBA does not meet in January.)
Wednesday's data from the Australian Bureau of Statistics showed retail sales rose 0.4 per cent in September, from August when they increased by a matching amount.
Sales for the third quarter rose by 0.6 per cent when adjusted for inflation, which remained subdued across most retail sectors.
The retail industry accounts for A$290 billion of Australia's A$1.6 trillion (S$1.6 trillion) of annual economic output, and is the second biggest employer with 1.25 million workers.
Other data showed the trade deficit narrowed more than expected to A$2.3 billion in September, thanks to exports rising 3 per cent.
Exports to China were up almost 14 per cent on September last year even though prices for key commodities such as iron ore were weaker, a testament to the ability of Australia's low-cost producers to grab market share.