Retail sales figures have been lacklustre for the past couple of years despite a declining savings rate. Economists have explained the low growth rate as a result of record household debt and a low rate of income growth. There is also the issue of effect of price deflation. Despite this environment and a hiccup in July, sales figures have exceeded market expectations in recent months and the latest sales figures were described as “encouraging”.
According to the latest ABS figures, total retail sales met expectations in August as it increased by 0.3% over the month on a seasonally-adjusted basis. On a year-on-year basis, sales grew by 3.8%, up from July’s revised annual rate of 2.9%.
The result marks a return to a run of figures published before July’s worse-than-expected result when retail sales undershot expectations by 0.3%.
Local bond yields was largely unaffected while the local currency continued its downtrend against the US dollar. The yield on 3-year ACGBs slipped by 1bp to 2.09% while the 10-year and 20-year ACGBs each gained 1bp to 2.74% and 3.06% respectively. The Aussie dollar finished the day around 0.3 US cents lower at 70.50 US cents and prices of cash futures contracts moved to imply a slightly lower chance of a rate rise in any particular month in the second half of 2019.