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ISCOVER
Staff Reporter
Weak retail figures have provided the Reserve Bank with another reason to cut the official cash rate.
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The latest data from the Australian Bureau of Statistics found retail sales were flat in November – below the market expectation for 0.4 per cent growth.
In year-ended terms, retail sales rose 3.1 per cent, which is well below the long run average of 5.6 per cent year on year.
While retail sales have become less relevant to the Reserve Bank in recent times, because of a shift in household spending behaviour, HSBC's chief economist Paul Bloxham said the RBA will still be keeping a watchful eye on the latest data.
"Over the coming months the RBA will be looking for signs that their two rate cuts late last year are starting to have an impact on the interest rate sensitive parts of the economy, and retail sales will play a critical role," he said.
"So far indications suggest that both sectors remain weak, though there are some early signs of stabilisation in the housing market."
Mr Bloxham said the weak data could spur the RBA to cut rates again and, if that happens, the retail sector should slightly improve in 2012 as rates fall below neutral.
