Finance Finance News Retail sales strong, building approvals solid

Retail sales strong, building approvals solid

AAP
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Retailers enjoyed a stronger-than-expected rise in sales during November, while building figures remained solid.

Bureau of Statistics figures show sales rose 0.7 per cent in November to $22.46 billion, building on a 0.5 per cent rise in October, seasonally adjusted.

Economists, on average, had only expected a 0.3 per cent rise in sales according to a poll by Reuters.

The best gains were for recreational goods (4.3 per cent), newspapers and books (3.8 per cent), cafes and restaurants (2.8 per cent) and footwear and other personal accessories (1.9 per cent).

Liquor retailing (-2.6 per cent), department stores (-2 per cent), specialised food sales (-1.4 per cent) and hardware and garden supplies (-0.2 per cent) were the sectors to experience falling sales.

The Northern Territory (1.7 per cent) and Western Australia (1.3 per cent) had the biggest rise in sales, while only the ACT (-0.2 per cent) reported a fall in turnover.

RBC Capital Markets head of Australian economics Su-Lin Ong says the Reserve Bank will be pleased that low interest rates are boosting consumer spending.

“While some pullback could have occurred given higher fuel prices, a still sluggish labour market, and recent strong prints, November sales largely defied this,” she observed in a note on the data.

“Indeed, it would appear, if anything, that sales momentum has strengthened.”

Building momentum

Separate ABS building approvals figures for November confirm that the residential construction sector is maintaining somewhat of a revival.

While overall building approvals slipped 1.5 per cent in the month, that was entirely driven by a 9.7 per cent decline in the volatile ‘other dwellings’ component that covers units and town houses.

The more stable detached house figures posted a 6 per cent rise.

Overall, 16,396 new dwellings were approved by local governments in November, a figure that is up 22.2 per cent on last year and would imply the addition of almost 200,000 homes a year to the national supply if all the approvals fed through to completed dwellings.

The more stable trend figures for November showed house approvals up 1.1 per cent for the month and unit approvals rising 4.4 per cent.

Su-Lin Ong says the trend figures remain encouraging.

“The total underlying trend continues to rise, consistent with a modest residential construction upswing,” she noted.

“The preconditions for a strengthening in this upswing remain in place.”