Australian retail sales unexpectedly fell in March and job advertisements dropped for a second month, sending the currency lower as traders see a 50-50 chance the Reserve Bank of Australia would resume cutting interest rates today.
Sales declined 0.4 percent to A$21.9 billion (US$22.5 billion) from a month earlier, when they rose 1.3 percent, the Australian Bureau of Statistics said yesterday. That was the first drop of the year and missed economists’ estimates for a 0.1 percent gain. An Australia & New Zealand Banking Group Ltd report showed that “help wanted” notices fell 1.3 percent last month.
“The retail data and the decline in job ads should be consistent with an interest rate cut from the Reserve Bank tomorrow,” said Joshua Williamson, a senior economist at Citigroup Inc in Sydney who predicted the 0.4 percent drop and expects the central bank to lower borrowing costs.
The Australian dollar traded at US$1.0283 at 3:23pm in Sydney from US$1.0297 before the release. Traders are pricing in a 53 percent chance the Reserve Bank of Australia will reduce the benchmark rate to a record-low 2.75 percent today, according to swaps data compiled by Bloomberg.
Reserve Bank of Australia Governor Glenn Stevens and his board cut rates six times from November 2011 to December last year to buttress the economy. The rate is at 3 percent, matching a half-century low, as policymakers aim to stimulate industries outside of mining, while the sustained strength of the currency is a drag on growth.
The report showed spending on clothing, footwear and personal accessories fell 4.2 percent, and consumers spent 1.5 percent less on household goods. Food retailing rose 0.8 percent, it showed.
Retail sales, adjusted to remove inflation, jumped 2.2 percent in the three months through March from the previous quarter.
“While retail volumes surged in the March quarter, today’s data highlights that the sustained high dollar and competitive pressures are weighing on prices across the economy,” a spokeswoman for Australian Treasurer Wayne Swan said in an e-mailed statement.
“There’s no doubt that the persistently high [Australian] dollar continues to have an acute and widespread impact on prices and profitability across the board, which has been one of the key drivers behind the recent hit to government revenues,” she added.
The Treasury is working on the assumption of 2.75 percent economic growth for this year and the next, the Australian Financial Review reported yesterday, without citing anyone. That compares with a forecast in October last year of 3 percent for both years.