Colin Brinsden, AAP Economics Correspondent
(Australian Associated Press)
Increased consumer confidence and spending should give retailers a warm glow heading into the crucial Christmas shopping season, even if the presence of internet giant Amazon sent a chill down the spine of some.
The Reserve Bank wasn’t about to upset the apple cart, keeping the cash rate at a record low 1.5 per cent after its monthly board meeting on Tuesday, as widely anticipated by economists.
“The low level of interest rates is continuing to support the Australian economy,” central bank governor Philip Lowe said in a statement.
“One continuing source of uncertainty is the outlook for household consumption … incomes are growing slowly and debt levels are high.”
Still, new figures showed retail spending grew 0.5 per cent in October, the largest monthly rise since May, having suffered a torrid time in the intervening months.
Australian Retailers Association executive director Russell Zimmerman said annual retailing growth of less than two per cent was “extremely disheartening”.
However, he still expects the Christmas spend-up to reach a forecast $50 billion worth of sales in the six weeks of the seasonal shopping period.
He has found a great amount of “positiveness” when touring around stores.
“Things are looking pretty good at the moment, I won’t be surprised if that $50 billion is beaten,” he told Sky News.
The retail data coincided with the weekly ANZ-Roy Morgan consumer confidence index, rising 0.7 per cent.
However, Wednesday’s national accounts for September quarter – a comprehensive guide to the state of the economy – is expected to show more modest household spending compared to the previous quarter.
Economists expect overall economic growth to have expanded by 0.7 per cent in the September quarter, which would take the annual rate to three per cent.
This would be up from 1.8 per cent as of the June quarter.
Some economists had trimmed their growth forecasts after a separate report on Tuesday showed net exports – exports minus imports – will make no contribution to growth when a small input had been expected.
Dr Lowe said the bank’s central forecast is for GDP growth to average around three per cent over the next few years.
It was the Reserve Bank’s final board meeting of the year, and it won’t gather again until February.