Australian Retail Sales Jump in August as Weather Turns Warmer — Update

By James Glynn

SYDNEY--Australian retail sales were much stronger than expected in August as the impact of income-tax cuts in July fed through to spending, while unusually warm weather lifted clothing and cafe sales.

Retail turnover rose 0.7% in August, well above the expected rise of 0.4%, the Australian Bureau of Statistics said Tuesday. That followed growth of 0.1% in July and 0.5% in June.

The strength in retail sales through August will lift economic growth in the third quarter, pulling the economy away from a potential contraction.

The data also fits with the Reserve Bank of Australia's recent hawkish guidance, likely pushing any prospect of an interest-rate cut into next year.

"Retail spending was boosted this month by warmer-than-usual weather for this time of year," said Robert Ewing, head of business statistics at the ABS.

"This year was the warmest August on record since 1910, which saw more spending on items typically purchased in spring. This included summer clothing, liquor, outdoor dining, hardware, gardening items, camping goods and outdoor equipment," he added.

Of the nonfood industries, sales at department stores rose 1.6% in August, with clothing, footwear and personal accessory retailing also up.

"The lift in turnover from the warmer weather was also boosted by higher discretionary spending as consumers took advantage of Father's Day sales events during the month," Ewing added.

Still, some economists warned that the rise in retail sales was due mostly to one-off factors that won't be present in coming months.

"We're not particularly confident that a vigorous rebound in consumer spending will take hold," said Abhijit Surya, economist at Capital Economics.

"It bears mentioning that income tax cuts seem to be doing little to boost spending on white goods, with sales of household goods falling in August," he added.

Car sales were also weaker in August, Surya said.

Write to James Glynn at james.glynn@wsj.com

(END) Dow Jones Newswires

September 30, 2024 22:34 ET (02:34 GMT)

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