A spike in retail spending for January has added to speculation of an interest rate hike later in the year.
Retail spending rose by 1.2 per cent in January to $22.9 billion, figures from the Australian Bureau of Statistics show, trumping forecasts of a 0.4 per cent rise.
It was another sign the Australian economy was adjusting as the mining boom winds down, AMP Capital chief economist Shane Oliver said.
“The latest data coming on the heels of stronger than expected GDP growth add to evidence that other sectors of the economy are starting to fill the gap left by the slump in mining investment,” he said.
However, JP Morgan economist Ben Jarman said it was too early to judge if the retail sector was finally emerging from a long period of weakness.
He also cautioned that the retail figures may have received a boost from the timing of federal government payments, including a bonus to help pay for back-to-school needs.
“Certainly the anecdotes we’ve heard from retailers have been that things were reasonable in January after a good Boxing Day to new year period,” he said.
“So we are a bit reluctant to say this is a return to the good old days of retail.”
ANZ senior economist Felicity Emmett agreed the Schoolkids Bonus payments would have helped boost retail spending.
“It does suggest there may have been some impact from those higher government payments,” she said.
“However, it also shows retail trade trending up quite convincingly as consumer confidence rises along with house and equity price rises.
“Consumers are feeling more confident with the economic outlook.”
In other data released on Thursday, the country posted its largest trade surplus in almost three years, of $1.4 billion.
That reflected a four per cent rise in exports, and a one per cent rise in imports.
On Wednesday, economic growth in the December quarter came in at 0.8 per cent, taking the annual growth rate to 2.8 per cent, above market expectations.
Dr Oliver said the recent economic data showed there was no need for the Reserve Bank to cut interest rates again.
“Rather the debate will start to shift to when the first rate hike will come, which we still see as being later this year,” he said.
