The burst of economic data released today has increased pressure on the Reserve Bank to cut interest rates tomorrow, after weaker-than-expected retail sales, a fall in job ads for the eight straight month and flat inflation.

The Australian dollar fell following the morning’s releases, briefly dipping below $US1.04 before recoering slightly to buy $US1.0409 in late trade, a 0.1 per cent drop from late Friday.

But expectations that the RBA would cut interest rates tomorrow and the rise in Chinese manufacturing data for the first time in more than a year pushed the share market to 0.6 per cent gain - a five-week high.

In the late afternoon, the RBA said its index of commodity prices rose by 1.7 per cent in SDR (Special Drawing Rights) terms for October, after falling by 2.9 per cent the previous month. The Reserve Bank said the rise was fuelled by increases in the prices of iron ore and coking coal. Rural commodity prices also rose, while base metal prices slid in the month.

Rate cut still anticipated

‘‘The market has moved pretty quickly over the past week to pretty much fully discount a move tomorrow, and these data aren’t really going to change any perceptions about that,’’ said Michael Turner, a strategist at RBC Capital Markets.

Ivan Colhoun, the head of Australian Economics and Property Research at ANZ, said he expected a further easing of interest rates to help the Australian economy as it moves away from mining investment growth.

‘‘We continue to expect a 25 basis points cut at the RBA Board meeting tomorrow and for the Bank to maintain a strong easing bias in 2013.’’

Manufacturing index Australia’s manufacturing sector shrunk for the ninth month in a row, dropping 1.6 points to 43.6 for November, as firms fretted over soft demand, higher energy costs and a strong Australian dollar. In contrast, October saw a 1.1 point gain.

Inflation A private sector gauge on inflation showed consumer prices fall 0.1 per cent last month, following a 0.1 per cent increase in October. The annual pace of inflation was up to 2.5 per cent from 2.4 per cent, remaining in the middle of the RBA’s 2 to 3 per cent target band.

The survey showed that price rises for bread and cereal products, newspapers, books and stationery, and dairy products were offset by falls in fruit and vegetables, automotive fuel, and holiday travel and accommodation.

Housing prices Data released by analysts RP Data-Rismark show that there has been no movement last month across capital cities.

Melbourne registered a 1 per cent decline in dwelling values in Melbourne. Sydney and Hobart was almost flat with 0.1 per cent growth, while Adelaide and Brisbane grew by 0.5 per cent, Perth rose by 1 per cent, Darwin by 1.1 per cent and Canberra by 1.3 per cent.

Retail sales Retail sales remained flat. A 0.4 per cent rise that was forecast was not met, and follows a 0.5 per cent growth in September. The weaker-than-expected retail sales increases pressure on the RBA to cut rates. Interbank futures are forecasting a 76 per cent chance of a quarter-point cut to the interest rate to 3 per cent.

Company operating profit Company gross operating profit for the third quarter fell 2.9 per cent to 61.75. The Australian Bureau of Statistics (ABS), which released the data, said company profits before income tax rose 4.8 per cent in the quarter compared with the previous quarter.

Inventories Business inventories rose 1.1 per cent in the third quarter to 154.36, data released by the ABS showed.

Job ads Softer labour demand saw job advertisements in newspapers and online fall 2.9 per cent in November, the eight-straight-month of decline, an ANZ survey stated. Total job fell a seasonally adjusted 2.9 per cent to 138,376 in November, following a drop of 4.6 per cent in November. It was down 16.7 per cent from November in 2011.

‘‘The trend in job advertising has continued to deteriorate,’’ Ivan Colhoun, the head of Australian Economics and Property Research at ANZ, said. ‘‘The weakness in job advertisements across the mining states of Western Australia and Queensland has been particularly concerning.’’

BusinessDay with Reuters