"Firms in the non-mining economy aren't yet confident about reinvesting"
- Citi economist Josh Williamson
The amount of money spent at Australian retail outlets surged four times faster than initially was expected, due to gains in household goods and department stores, as interest-rate reductions encouraged spending and consumers' confidence. According to the Bureau of Statistics, retail sales grew by 1.3% to A$21.95 billion ($23 billion) from a month earlier, when they increased a revised 1.2%, beating analysts' expectations, which called for a tepid 0.3% gain and posting the biggest back-to-back gain in almost four years. Since November 2011, the Reserve Bank of Australia has made six rate cuts, totalling 1.75 percentage points, stimulating industries outside mining, where investment is predicted to plateau this year. A report also showed that no sectors posted declines, while spending on household goods, at department stores and on other retailing all gained 1.6%.
"Monetary policy is working," Paul Bloxham, chief Australia economist at HSBC Holdings Plc in Sydney and a former RBA official, said in a Bloomberg Television interview today. "
"There are a number of indications that the substantial easing of monetary policy during late 2011 and 2012 is having an expansionary effect on the economy," Reserve Bank of Australia Governor Glenn Stevens's said.
© Dukascopy Bank SA