- Richard Grace, Commonwealth Bank of Australia chief currency strategist
Retail sales in Australia continued to rise for the second consecutive month in July, an optimistic sign of both consumption and economic growth in the third quarter. The Australian Bureau of Statistics said retail sales increased seasonally adjusted 0.4% to $23.31 billion, while the June's figure remained unrevised, showing the 0.6% climb. The improvement recorded in July and June combined was the strongest since the beginning of the year, indicating that ultra-low interest rates are helping to spur consumer confidence. Consumer morale was buoyant in July, rebounding from a sharp decline on news in May of new taxes and spending cuts announced in the government's 2014-15 budget. The improvement is important as the A$270 billion retail sector accounts for roughly 17% of Australia's A$1.6 trillion in annual GDP and is the second-biggest employer, providing 10% of all jobs.
A separate report showed the fourth consecutive monthly trade deficit in July, reflecting sharp declines in key commodity prices since the start of the year. Nevertheless, trade deficit shrank more than expected, coming in at A$1.36 billion in July, down from a revised A$1.56 billion deficit a month earlier. The Australian dollar jumped to the highest in a week on the back of better than expected local trade balance figures. The local Dollar reached 93.65 U.S. cents following the data release and stayed above the 93.50 U.S. cents.
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