SYDNEY, Aug 2 (Reuters) - Australian retail sales rose more than expected in June in a sign recent mortgage rate cuts and a bottoming in the country’s housing prices had lifted the consumer mood.
Friday’s data from the Australian Bureau of Statistics (ABS) showed retail sales climbed 0.4% in June after a 0.1% gain in May, above analysts’ forecast for a 0.3% rise.
That was the best monthly growth since February when retail sales jumped 0.8%.
Quarterly data was disappointing though as sales added just 0.2% in inflation-adjusted terms in the three months to June following an already sedate March quarter. Analysts were looking for a 0.3% rise.
The soft result suggests retail sales barely contributed to growth in Australia’s A$1.9 trillion economy in the June quarter. Household spending accounts for around 57% of annual gross domestic product.
The quarterly weakness in volumes was led by household goods and food. Department stores, cafes, restaurants and takeaways, and clothing all ticked higher.
Consumer spending has been under pressure in Australia from record-high household debt, sluggish wage growth and falling house prices.
Tepid consumption is a major source of worry for the RBA which, in June, eased its benchmark cash rate for the first time since August 2016 and quickly followed up with a second cut to an all-time low of 1.00% last month.
Financial markets are pricing in a real chance of a third cut to 0.75% before Christmas. With another 25-basis-point easing already priced in, the local dollar barely moved at $0.6804.
Australia’s property market is already showing some early signs of revival while consumer mood is also helped by government tax rebates to millions of households. (Reporting by Swati Pandey; Editing by Sam Holmes)