- Scott Haslem, UBS Chief Economist
Australia's retail sales remained unchanged in April from March, against economists' expectations for a 0.3% gain. Increases in sales of furniture, houseware, clothing and restaurant services were offset by drops in sales of liquor, footwear and recreational goods. The statistics bureau also revised down the March retail-sales data a 0.2% rise from February. The data suggests that consumers are still reluctant to spend up lavishly even as the Reserve Bank of Australia continues to each monetary policy. Earlier in the week the central bank kept its official cash rate unchanged at a record low of 2%, having already trimmed rates in February and May. The RBA's assessment of demand was optimistic, indicating that household spending "has improved", including a "large rise" in dwelling construction, while exports were also increasing.
Meanwhile, Australia logged its worst monthly trade deficit on record, as imports exceeded exports by almost $3.9 billion. The country's trade deficit more than tripled, following a revised $1.2 billion gap recorded in March, and overshot analysts' expectations for a $2.1 shortfall. Exports of coal and related products were hurt by harsh weather, while falling commodity prices clipped the value of metal ores and minerals, including iron ore. The value of exports overall fell by 6% in April from March. Meanwhile, imports jumped by 4%, led by a 69% surge in the value of machinery and industrial equipment.
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