RETAIL spending has risen for the fifth consecutive month, helped by solid gains in the household goods and department stores category.
Australian retail spending rose 0.4 per cent in October, after a 1.3 per cent rise in September, the Australian Bureau of Statistics said on Thursday.
Economists had been forecasting retail spending to edge up 0.1 per cent in October.
JP Morgan economist Tom Kennedy said the better than expected figures were positive, but still soft.
“It was a little bit better than everyone was looking for, and when you look at the categories, the details were actually pretty good too,” Mr Kennedy said.
“Household goods retailing was up, clothing was up, department stores were up, so it was broadbased strength.
“But even though it did beat expectations, 0.4 per cent is still quite a soft print and still leaves the data with a softish tone, just given yesterday’s GDP print and the general performance of the economy over the past quarter or so.”
ANZ senior economist Felicity Emmett said it was encouraging that the discretionary spending categories continue to make solid gains.
In combination with last month’s numbers, it looks as if retail sales momentum has picked up,” she said.
“As yesterday’s national accounts showed, however, overall consumer spending growth remains relatively soft, with slow growth in household incomes weighing on spending.”
St George chief economist Besa Deda said October was an encouraging outcome considering it follows the 1.3 per cent rise in September, which was the biggest rise in nearly five years.
“It shows that retail is doing reasonably well, benefiting from low interest rates, the upswing in population growth and the upswing in house prices,” she said.
Ms Deda said even though retail spending is solid, overall household consumption is still quite weak, as seen in Wednesday’s September quarter economic growth data.
“That’s because retail trade is only one component of overall household consumption,” she said.
“So I think the debate is going to continue to rage about interest rate cuts, despite the good data today.” Ms Deda said the 1.4 per cent rise in household goods spending bodes well for the housing sector.
“That is reflecting what is happening with housing activity, there is more building happening, there are more purchases of homes and that is leading through to the retailing of household goods,” she said.