Stellar Oz Retail Stats Make Rate Rise Likely

Sydney. Australian retail sales surged past all expectations in November to record the biggest increase in eight months, making a fourth straight rise in interest rates next month more likely.

The Australian dollar hit a two-year high on the euro as investors bet the Reserve Bank of Australia would hike when it next meets in early February.

“This shows the Australian economy is certainly on a recovery path,” Michael Blythe, the chief economist at Commonwealth Bank, explained.

“It revives speculation the RBA will come back and give us a rate rise in February.”

The central bank has already raised its key cash rate three times in as many months to stand at 3.75 percent, far above most other developed nations.

Thursday’s data from the government stunned analysts by showing a 1.4 percent jump in retail sales for November, a number way above the average forecast of 0.3 percent.

“It is quite extraordinary how strong sales were,” Brian Redican, a senior economist at Macquarie, said. “It sets the fourth quarter for a very good pick up in private consumption.”

Other data released on Thursday showed Australia’s trade deficit narrowed much as expected in November to 1.7 billion Australian dollars, from 2.08 billion Australian dollars the month before.



Reuters

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