Australian Retail Sales See Largest Surge Since November 2021

Summary

  • Retail sales in Australia saw a rise of 2% from October, reaching a high of A$36.51 billion ($24.54 billion).
  • The increase exceeded analyst projections and signifies the highest increase since November 2021, according to the Australian Bureau of Statistics (ABS).
  • Despite sluggish annual growth compared to the post-pandemic boom in mid-2022, sales were up 2.2% from the previous year.
  • The surge is attributed to Black Friday sales and early Christmas shopping, which offset the high interest rates and cost of living pressures on household income.
  • Interest rates have risen to 4.35%, a 12-year peak, but consumer spending remained resilient due to climbing house prices, population surge, and pandemic stimulus savings.

The economy had a promising boost in retail with a 2% rise from October 2023, marking the highest leap since November 2021. The increase amounted to A$36.51 billion ($24.54 billion), marking a significant advance, as revealed by the Australian Bureau of Statistics (ABS) data on Tuesday, surpassing the 1.2% increase predicted by analysts and dwarfing the revised 0.4% slump of October.

Year-on-year sales progressed 2.2%, despite this growth being slow compared to the post-pandemic 19% increase secured in mid-2022. High interest rates and living cost pressures were the major obstacles to household incomes.

Impact of Promotional Sales & Seasonal Shopping

“The success of Black Friday sales played a crucial role in this year’s rise, with retailers initiating promotional periods sooner and extending them compared to prior years,” stated ABS Business Statistics Chief, Robert Ewing.

A compelling surge in November implies that consumers could have delayed their discretionary spending in October to exploit Black Friday discounts. They may have also advanced their Christmas shopping that would typically happen in December.

The results are somewhat skewed due to the yet-to-catch-up seasonal adjustment process with the Black Friday and Cyber Monday events’ growing popularity, thus inflating November sales at December’s expense and stretching over several months.

Consumer Spending and Interest Rates

Since May 2022, interest rates have ascended by 425 basis points to a comprise 12-high of 4.35%. However, amid the slowdown from its two-digit growth, consumer spending has stayed resilient due to rising house prices, booming population, and savings from pandemic stimulus.

The report showed that discretionary goods drove November’s sales, household item expenditures shot up by 7.5%, thus overturning a 1% slide the prior month. Additionally, there were hikes in expenditure in departments stores, clothing, and footwear by 4.2% and 2.7%, respectively.

Future Market Projections

The Reserve Bank of Australia (RBA) is likely to overlook the November retail sales outcome, having mentioned in its December minutes the distortion of usual seasonal spending patterns due to the Black Friday sales, thus complicating the process of obtaining a precise read of the core momentum in spending.

Both the Australian dollar and three-year bond futures remained steady at $0.6723 and 96.27, respectively. Swaps bet that the RBA’s tightening campaign is nearly over, with about 40 basis points of relaxation presaged for 2024.

A recent ANZ survey indicated that at 2024’s dawn, consumer confidence soared to a near one-year high, partly due to surging house prices and peaking rates.

(Exchange rate: $1 = 1.4877 Australian dollars)

This information may influence forex and trading, particularly for those dealing with Australian-based assets. Increased consumer spending paired with stabilized interest rates potentially influence the AUD’s value and subsequent forex trading prices.

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