Australian Retail Sales Rose 0.1% in November on Food

By Jacob Greber

Jan. 7 (Bloomberg) -- Australian retail sales rose in November as consumers spent more on food.

The retail sales trend series increased 0.1 percent from October, when it advanced by 0.2 percent, the Bureau of Statistics said in Sydney today. The median forecast of 10 economists surveyed by Bloomberg News was for a 0.1 percent gain.

Australia’s economy expanded at the weakest pace in eight years in the three months through September as spending by households stalled. To stoke domestic spending, central bank Governor Glenn Stevens has cut borrowing costs by three percentage points since September, the biggest round of easing since the economy was last in recession in 1991.

“We suspect sales volumes were boosted in November by the aggressive discounting seen among retailers, coupled with lower interest rates and falling petrol prices,” said Helen Kevans, an economist a JPMorgan Chase & Co. in Sydney.

“Households are facing considerable headwinds, however,” she added. “The labor market has started to loosen, credit availability has fallen and precautionary saving has risen.”

Spending on food rose 0.7 percent in November, while sales at department stores dropped 0.4 percent, the report showed. Consumers also spent 0.3 percent less on clothing.

The seasonally adjusted measure of retail sales climbed 0.4 percent in November from the previous month. Economists had expected a 0.4 percent decline.

Sales Slow

Australia’s dollar traded at 72.04 U.S. cents at 12:21 p.m. in Sydney from 71.92 cents before the figures were released. The two-year government bond yield rose 3 basis points, or 0.03 percentage point, to 2.99 percent.

Retail sales gained by an average of 0.1 percent a month in 2008, according to the bureau’s trend series, down from 0.6 percent monthly growth in 2007.

The statistics bureau shifted its focus to trend retail sales after it cut the sample size of the survey by two thirds in July to reduce costs. The bureau said today it will reinstate the full survey for December and that it increased its sample size for November.

The government distributed A$8.9 billion ($6.4 billion) at the start of last month to the elderly and families after retailers including David Jones Ltd., the nation’s second- biggest department store chain, reported waning sales.

Outlook Worsens

David Jones Chief Executive Officer Mark McInnes said in November that the outlook for the rest of fiscal 2009 is worse than that experienced by the company in the last recession of 1990 to 1991.

A report yesterday predicted sales of new cars and trucks will fall 13 percent this year to 880,000 vehicles. Sales dropped 3.6 percent in 2008 to 1.01 million vehicles from the previous 12 months, the Federal Chamber of Automotive Industries said.

“The Reserve Bank has further work to do although we do expect a more modest pace of easing in the months ahead,” said Su-Lin Ong, senior economist at RBC Capital Markets Ltd. in Sydney. She expects a half-point reduction in the benchmark rate to 3.75 percent on Feb. 3.

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net