"The further pick-up of retail sales provides a sign that record low interest rates, combined with rising household wealth, are seeing a less cautious consumer that will lead to better consumption growth (which we expect to be evident over the year ahead)."
- Economists at UBS
Australian central bank decided to stay in the "wait-and-see" mode during its December policy meeting, expressing their readiness to act in case economy struggles to grow. Glenn Stevens' comments about "uncomfortably high" Aussie as well waning investment in the mining sector, analysts raised their bets the easing cycle is not over yet. Nevertheless, Oz consumers were more generous with their money in November, adding to signs the economy is in the wake of a modest recovery.
The Australian Bureau of Statistics said sales at Australian retailers were 0.7% up from a month ago, accelerating from a 0.5% increase in October. Moreover, the data outpaced analysts' expectations for a 0.4% growth. On the back of positive data the Aussie rose 0.04% against the U.S. Dollar, climbing back from a loss of 0.17%. While consumer spending is on the mend, the number of building approvals disappointed markets. On a monthly basis, consents for new buildings plunged 1.5%, a figure 0.5% below the average level expected by analysts. Nonetheless, consents were 22.2% higher on an annual basis in November, as record-low interest rates continue to boost momentum in the housing sector. As the resource-rich economy is stuck in the transition phase from mining sector, a pickup in the property market can compensate some losses to the economy.
© Dukascopy Bank SA