Australian retail sales jumped for a third consecutive month to hit a record, driven by a spending revival on the nation’s flood-ravaged east coast and highlighting the economy’s strong underlying momentum.
Sales surged 1.6% in March to A$33.6 billion ($23.9 billion), more than triple economists’ forecast for a 0.5% increase, Australian Bureau of Statistics data showed Wednesday. The ABS will release quarterly figures on May 10.
Weather and fuel price effects were expected to weigh on Retail Sales in March while housing finance approvals were set to fall in March given the housing cycle peak has started this year. Owner-occupier loans are expected to outstrip investor loans in the decline for the month.
The Retail Sales released by the Australian Bureau of Statistics is a survey of goods sold by retailers is based on a sampling of retail stores of different types and sizes and it’s considered as an indicator of the pace of the Australian economy. It shows the performance of the retail sector over the short and mid-term. Positive economic growth anticipates bullish trends for the AUD, while a low reading is seen as negative or bearish.
The main data monitored by the markets were Retail Sales, and has, however, surprised to the upside as follows:
Retail Sales in March arrived at 1.6% vs. expected 0.5%. As a consequence, the Aussie is making tracks to the upside in otherwise slow markets ahead of the Federal Reserve later today.
The data compliments a hawkish Reserve Bank of Australia that surprised markets yesterday with a 0.25% hike.
The price has popped on the better news from the retail sector amid a hawkish RBA environment. The bank hiked by 0.25% but the consensus expectation had been for a 15bp hike to 0.25%.
”The move was on the hawkish end of the spectrum, with the RBA emphasising that ‘a further lift in interest rates over the period ahead’ will be ‘necessary to ensure that inflation… returns to target over time’,” analysts at ANZ Bank explained.
”After last week’s surprisingly strong 5.1% print for headline inflation, the RBA is now expecting inflation to reach 6% by the end of the year, with core inflation at 4.75 percent. High time for rate hikes.”
Markets will now look ahead to the Federal Reserve which is expected to raise the Fed Funds rate by 50bp to 0.875% and provide a confirmation of the quantitative tightening process. A surprise either way could make for volatility in AUD/USD later today.
