Retail sales are still booming with Harvey Norman today tipped to announce record sales. Contributing to its sucess is consumer electronic products and a surge in notebook and digital camera sales.Australia’s retail sales probably increased for a second month in July as income-tax cuts, rising wages and jobs growth prompted consumers to spend more.
Sales advanced 0.6 percent from June, when they surged 1.4 percent, according to the median estimate of 26 economists surveyed by Bloomberg News. The Bureau of Statistics will release the report tomorrow at 11:30 a.m. in Sydney.
The Reserve Bank of Australia raised its benchmark interest rate this month to the highest in almost 11 years, saying consumer spending had picked up “noticeably.” Woolworths Ltd., the nation’s largest retailer, this week forecast profit growth of more than 20 percent, and electronics retailer JB Hi-FI Ltd. says sales may rise 33 percent this financial year.
“Household disposable incomes are growing strongly and we expect spending to be supported by cash bonuses and tax cuts announced in the government’s May budget,” said Joseph Capurso, an economist at Commonwealth Bank of Australia in Sydney. “This sort of environment is conducive of solid increases in retail spending.”
Income-tax cuts totaling A$31.5 billion ($25.5 billion) for the nation’s 10.5 million workers began on July 1. The government handed out a further A$5 billion in cash benefits to families and older people in its annual budget.
Among retailers that have reported rising earnings, Woolworths said annual profit climbed 27 percent to A$1.29 billion. The Sydney-based company forecasts net income will surge as much as 23 percent in the year ending June 29, 2008, with sales increasing between 7 percent and 10 percent.
Sales at JB Hi-Fi, a Sydney-based consumer-electronics retailer, soared 43 percent in the six months ended June 30. The company expects sales in the current year to advance 33 percent to A$1.7 billion.
Driving spending, Australia’s unemployment rate has fallen to a 33-year low of 4.3 percent. Employers hired more than 250,000 extra workers in the 12 months ended July 31.
The wage price index, which measures hourly rates of pay excluding bonuses, gained 1.1 percent in the second quarter from the previous three months. That equaled the strongest quarterly increase since the series began in 1997.
The nation’s economy expanded 1.6 percent in the first quarter from three months earlier. Consumer spending contributed 0.9 percentage point to that rate.
The central bank raised the overnight cash rate target a quarter point to 6.5 percent this month. Most economists expect another increase before the end of the first quarter of 2008.
“Domestic spending is rising,” Reserve Bank Governor Glenn Stevens said on Aug. 17. “Household finances, like corporate finances, are generally in strong shape.”