Australia’s retail sales increased by the most in seven months in January as consumers spent more at department and clothing stores.
Retail sales climbed 0.8 percent from December, when they rose a revised 0.5 percent, the Australia Bureau of Statistics said in Sydney today. The median forecast of 20 economists surveyed by Bloomberg News was for a 0.3 percent increase. The hottest January on record bolstered spending on air conditioners and fans at stores including those owned by Harvey Norman Holdings Ltd. Rising retail spending may help economic growth rebound after the fifth-largest economy in the Asia-Pacific region expanded at its slowest pace in four years in 2005.
“We expect economic growth to pick up over 2006 and consumer spending may improve a bit,” Jarrod Kerr, an economist at JPMorgan Chase & Co., said in Sydney before the report was released. “Consumers are getting used to high fuel prices and hot weather probably stoked sales of air conditioners in January.”
The Australian dollar rose to 74.61 U.S. cents at 11:37 a.m. in Sydney trading from 74.48 cents immediately before the report. The yield on a 6.25 percent government bond maturing in April 2015 rose 0.01 percentage points to 5.27 percent.
Australia’s central bank will probably keep its overnight cash rate unchanged next week at 5.5 percent for a 12th month. Reserve Bank of Australia Governor Ian Macfarlane last month said interest rates were more likely to rise than decline, though the bank has no imminent plan to move borrowing costs.
Australia’s economy, in its 15th year of expansion, grew a less-than-expected 0.5 percent in the fourth quarter as home building declined and consumer spending slowed.
The economy expanded 2.5 percent over last year, the smallest annual increase since 2001.
Retail spending on clothing rose 2.7 percent in January from December and sales at department stores climbed 2 percent, today’s report showed. Sales of household goods dropped 1.2 percent.
Spurring retail sales, Australian consumer confidence gained in January as concern eased the central bank would raise interest rate. It last increased borrowing costs in March 2005. The consumer sentiment index rose 2.6 percent from December to 107.4. A reading above 100 shows optimists outnumber pessimists.
Harvey Norman increased sales 10.7 percent to A$1.24 billion ($920 million) in the three months ended Dec. 31 as warm weather stoked demand for air conditioners. The retailer said the sales increase continued in January.
`Worst Is Over’
“Air conditioners are flying out the door and it’s probably the biggest turnaround we’ve ever seen in their sales with the onset of hot weather,” Harvey Norman Chief Financial Officer John Skippen said last month.
The temperature in New South Wales was 3.5 degrees Celsius higher than the January historical average, according to the Bureau of Meteorology. Victoria, the second-most populous state, had its third warmest January since records began in 1950.
Woolworths Ltd., Australia’s largest grocery store chain, last week said sales in the six months ended Jan. 1 rose 18 percent to A$19 billion. Chief Executive Officer Roger Corbett expects full- year sales to rise by between 15 percent and 20 percent. The Sydney- based company also runs liquor retailers and department stores.
David Jones Ltd., Australia’s second-biggest department store chain, last week said it expects a recovery in consumer spending after its sales in the six months ended Jan. 28 fell 1.6 percent from a year ago.
“I think we are through the worst,” David Jones Chief Executive Officer Mark McInnes told reporters last week. “It’s now just a question of when do we see the rise and how quickly it comes.”