(Reuters)— Australian retail sales surpassed expectations in March as soaring house prices boosted consumer confidence while the re-opening of state borders allowed cashed-up households to splurge on travel again.
Sales rose 1.4% in March from February, outpacing forecasts for a 1% gain, preliminary data from the Australian Bureau of Statistics (ABS) showed on Wednesday.
Retail turnover of A$30.72 billion ($23.71 billion) was up a hefty 2.3% on March last year, just when the COVID-19 pandemic hit.
Household consumption in recent months has been driven by skyrocketing house prices, government welfare payments, record low borrowing costs and a surge in employment — all of which have boosted consumer confidence.
Wednesday’s data supports the view that Australia’s A$2 trillion economy is on a solid footing though the Reserve Bank of Australia (RBA) will wait for inflationary pressures to emerge before considering interest rate hikes.
Despite the strong turnover for March, sales values were down 0.1% in the first quarter from the prior three-month period, implying “that retail and by extension household consumption won’t be a major contributor to economic growth in the March quarter,” said Callam Pickering, economist at global job site Indeed.
“These retail figures do not change the outlook for monetary policy,” Pickering added.
“The downside risks from the retail sector may even slow the pace of labour market recovery over the remainder of the year.”
The Australian dollar fell 0.1% to $0.7718, drifting away from a one-month high of $0.7816 reached on Tuesday.
Wednesday’s data showed Victoria and Western Australia led the gains, after sales were hit in February due to brief coronavirus lockdowns in both states.
Cafes, restaurants and takeaway food services led the rises, driven by Victoria and Western Australia. Clothing, footwear and personal accessory retailing, and department stores were also upbeat, the data showed.
The ABS will release the final estimate for February sales on May 10.
