Australian retail sales are likely to increase at a slower pace than past recoveries as higher interest rates erode consumer spending power, Access Economics said in a report today.
Retail sales will advance 1.6 percent in the 12 months ending June 30, the Canberra-based research company said. Sales will gain 2.9 percent in 2011-12 and 3 percent in 2012-13, based on job growth, higher wages and a gradual easing of consumer caution, Access said.
“This still looks set to be a more modest recovery in retail spending than is typically the case when employment is running hot,” the company, founded by two former Treasury economists, said in the report. Retail sales grew an average of 3.1 percent in the past five years, it said.
Australian retail sales declined last quarter and Myer Holdings Ltd., the nation’s largest department store chain, last month cut its profit forecast for the 2011 financial year. Reserve Bank of Australia Governor Glenn Stevens left the overnight cash rate target at 4.75 percent last week, after seven increases from October 2009 to November 2010.
Australian employers probably added 20,000 workers last month and the jobless rate stayed at 5 percent, according to the median estimate in a Bloomberg News survey of 19 economists ahead of a March 10 employment report.
Australia recorded its biggest annual gain in employment on record in 2010 as resource and energy companies boosted hiring to meet demand from China in what the RBA has called a once-in- a-century mining boom. Retail sales, adjusted to remove inflation, fell 0.3 percent in the three months through Dec. 31 from the previous quarter, a report showed last month.
“One can’t ignore the recent surge in Australia’s income,” Access said. “We suspect that over time, very low rates of unemployment should help to loosen the purse strings of consumers.”
Source: Bloomberg By
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