Retail spending continues to improve, driven by department store sales, reflecting the recent bounce in consumer confidence since the federal election.
Retail spending rose 0.8 per cent in September to $22.15 billion, beating economists’ expectations of a 0.4 per cent rise, the Australian Bureau of Statistics said.
“In the last couple of months, sales growth has ticked up a fair bit, coming in sync with the better consumer confidence numbers of late,” JP Morgan economist Ben Jarman said.
“Department store sales have been the clear outperformer for the last couple of months but that was after they essentially tanked in July, so we think it’s coming back after a bit of a distortion at mid-year.
“But we’re still a bit skeptical that you can see much of an uplift when labour income growth has been so weak, the hiring side of things has been so poor for so long, so we’re a little bit skeptical about whether this can be sustained.”
The ABS also released house prices data, showing prices rose 1.9 per cent in the September quarter and 7.6 per cent in the year to September.
JP Morgan economist Tom Kennedy said the data showed the housing market, particularly in Sydney, was on the rise.
“In the nation’s largest property market, things really are starting to heat up,” he said.
“In Melbourne as well, price appreciation was very strong and also in Brisbane.
“A big part of the Reserve Bank story is that they’ve been trying to revive the construction sector so I think the big uptick we’ve seen in prices definitely is supportive of that, as higher prices encourage activity and investment.”
Commonwealth Bank senior economist Michael Workman said the improvement in retail sales shows consumer confidence surged once the federal election was out of the way.
“There were also other things going on, the stockmarket improved dramatically over September as did the house price series,” Mr Workman said.
“There was a bit of a recovery in house prices, it was a pretty good result if you own a dwelling.”
Mr Workman said both sets of economic figures showed there was solid improvement in the non-mining parts of the economy.
“It follows a protracted period where we had pretty weak consumer spending figures and a delayed response to low mortgage lending rates,” he said.
“The next big step would be for consumer confidence to pick up a little bit more and also for businesses to act on this.
“Better business confidence should lead to more investment.”
Mr Workman said the improved data makes the chances of a cash rate cut by the Reserve Bank of Australia even less likely.