Australian Retail Sales On 3 Months Continuous Rise

Australian retail sales beat expectations for a third consecutive month in October, an encouraging sign for the economy heading into Christmas.

The retail sales rose at a seasonally adjusted 0.5% to $25.616 billion, following a gain of 0.6% in September that was the fastest in over a year, the national statistics bureau reported Friday. A median estimate of economists forecast retail spending to grow 0.3% in October.

The released data should also provide comfort to the Reserve Bank of Australia (RBA), given the retail sector has annual sales of A$290 billion ($220 billion) and is the country's second-biggest employer with 1.25 million workers.

The data also showed household goods were driving sales with electrical and electronic goods retailing climbing 1.7 percent while hardware, building and garden supplies gained 0.5 percent.

Sales of clothing, footwear and personal accessories dipped 0.4 percent, likely in part due to falling prices amid intense retail competition.

Over the past 12 months, sale in cafes, restaurants and takeaway food services recorded the fastest increase of any category at 7.3%. Department stores, at -4.0%, was the only category to record a decline in sales over the past year.

By state and territory, sales increased in Queensland (0.8%), Victoria (0.5%), New South Wales (0.3%), Western Australia (0.4%), the Australian Capital Territory (0.9%), Tasmania (0.6%) and the Northern Territory (0.3%).

South Australia, at -0.1%, was the only state to record a decline in sales. The fall may have be due to weather-related disruptions in late September, something that took its entire electricity grid down for nearly a day.

"It's a very solid result. It highlights that there has been a lift in overall activity. It's positive for inflation and for the economy as a whole," said Savanth Sebastian, economist at CommSec.

"The outlook for the retail sector is certainly better than it was six months ago and the Reserve Bank will be quite comfortable with these results."

"This retail sales data is probably more forward looking than the recent indicators we've had. From that perspective, it looks like the economy is still doing relatively okay," Sebastian added.

The Reserve Bank of Australia (RBA) says consumer spending has been expanding at a reasonable pace, but appears to have slowed recently. This was observed especially in the month of July, where Malcolm Turnbull’s coalition party narrowly retained power in the federal election.

The ASX 200 is currently trading down 0.4% at 5479 while the AUD/USD sits at 0.7418, up 0.05% for the session (and lower than where it was prior to the release).

Australian bond futures are trading softer (yields higher), but that is more than likely due to the selloff in global bonds seen overnight.