- Shane Oliver, head of investment strategy and chief economist at AMP Capital
Australian retail sales exceeded expectations in October, but sharply fell from the preceding month, sending mixed signals on Australia's economy after worse-than-expected economic growth data earlier this week. Retail sales rose 0.4% to $23.742 billion on month in October following the 1.3% advance a month earlier, which was driven by the release of Apple's iPhone 6, the Australian Bureau of Statistics said. The actual figure overshot market forecasts for a timid gain of 0.1%. Following the release of disappointing GDP figures yesterday, Treasurer Joe Hockey encouraged shoppers to spend heavily over Christmas. GDP growth slowed to 0.3% in the third quarter from 0.5% in the three months through June, falling far short of the projected 0.7% increase in economic growth.
In the meantime, Australia's trade deficit shrank in October, with increasing exports and falling imports more than compensating precipitous drops in export commodity prices and the impact of the strong Australian Dollar. The trade gap narrowed from a revised $2.24 billion in September to $1.32 billion in October. Exports rose 2% in the month under review, compared with growth in September to $26.9 billion, driven by a 4% rise in non-rural goods such as metal ores and minerals. Imports declined 2% to $28.2 billion over the same period, led by a 4% fall in intermediate and other merchandise goods.
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