Economists had been forecasting a rise of 0.4 per cent in retail spending for October. Photo: Jeff de Pasquale
Retail sales were flat in October as consumers cut spending on household goods, a surprisingly sluggish result that only added to expectations of another cut in interest rates this week.
Retail trade was unchanged in the month at a seasonally adjusted $21.563 billion, compared to an downwardly revised $21.570 billion in September, the Australian Bureau of Statistics said.
Economists had been forecasting a rise of 0.4 per cent for October.
A raft of other data out on Monday showed job advertisements fell for an eighth month in November, and a private gauge of inflation eased. Figures from the Australian Bureau of Statistics showed a drop in company profits last quarter, though a large rise in inventories should add to economic growth for the quarter.
Michael Turner, a strategist, at Rbc Capital Markets said that over the past week the the market had moved to pretty much fully discount a move tomorrow, ‘‘and these data aren’t really going to change any perceptions about that’’.
‘‘The momentum into Q4 appears quite soft. Obviously sales are on a pretty poor footing. Inventories were up, and you’d have to guess that was unintended, given the relatively sluggish state of the economy over the quarter. So we expect that to be unwound in Q4. And there’s really not very much demand for labour if the jobs adds are to be believed.
‘‘It really doesn’t change perceptions about tomorrow, but probably confirms that the RBA won’t be looking to close the door on any further easing beyond that. For Q3 GDP, the inventory number will help it.’’
Shane Oliver, chief economist, Amp Capital Investors said the retail sales data was ‘‘quite a bit softer than had been expected’’.
‘‘By and large it looks as if Australian consumers are still fairly cautious about things which I think is consistent with continued softish growth in the Australian economy.
‘‘I think there will probably be a rate cut tomorrow - there certainly should be because the retail sales data has come on the back of a range of soft readings particularly for business investment.
‘‘Today we’ve seen soft readings for the manufacturing PMI, house prices were basically flat in November and on top of that, the inflation gauge shows inflation looking benign.
‘‘We’re looking at a combination of soft economic data highlighted by the ongoing soft retail sales and benign inflation and all of that I think is consistent with more interest rate cuts.’’
The Australian dollar fell to a session low after the weaker-than-anticipated retail sales reading, adding to the chances of an interest rate cut this week.
The dollar dipped to $1.0404, from $1.0425 with interbank futures now factoring a 76 per cent chance of a quarter point easing to 3.0 percent on Tuesday when the central bank holds its monthly policy meeting.