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 are also the effects of price deflation on sales figures which, unlike many other economic reports, are not adjusted for inflation. However, 2018 sales figures to date have generally exceeded market expectations and they have been vastly higher than those in the same period in 2017.
According to the latest ABS figures, total retail sales increased by 0.3% over the month on a seasonally-adjusted basis, in line with the expected figure and an increase from September’s revised figure of +0.1%. On an annual basis, retail sales increased by 3.6%, the same as September’s revised figure.
Financial markets were hit on the day by forces from all directions. Local bond yields finished the day noticeably lower but a good part of the fall probably should be attributed to news involving the arrest of a Huawei executive which began to emerge on traders screens at midday. By the end of the day, the yield on 3-year ACGBs had dropped by 6bps to 1.94%, 10-year yields had fallen 5bps to 2.46% and 20-year ACGBs had lost 4bps to 2.81%.