Australian retail sales have responded to the RBA’s rate cut, surging 0.7% seasonally adjusted in February.
That’s almost double the 0.4% the market expected and another sign, along with this morning’s AiGroup PSI, that the domestic economy is starting to respond to the cocktail of lower interest rates, and the wealth effect of property and stocks.
The ABS reported that:
The largest contributor to the rise was food retailing (1.2 per cent). Household goods retailing (1.8 per cent) and other retailing (1.3 per cent) also recorded rises in February 2015. There were falls in department stores (-3.2 per cent), cafes, restaurants and takeaway food services (-0.4 per cent) and clothing, footwear and personal accessory retailing (-0.2 per cent).
The good news is that the increase in sales was across all the States, with New South Wales (0.7 per cent), followed by Victoria (0.8 per cent).
The rise of 0.5% last month and this month’s surge of 0.7% looks like it has arrested the recent fall in the 3 and 12 month growth rate.
The Reserve Bank Governor will announce the decision of the Board to either hold or cut rates at 2.30pm this afternoon. This data suggests their February rate cut has already gained some traction in the domestic economy.