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Australia: Another weak retail sales print – ING

Following horrible negative retail sales in August (-0.6% MoM), Australia’s consumers have not returned to the shops in any meaningful numbers according to September figures, according to Rob Carnell Chief Economist at ING.

Key Quotes

“These show no change in retail sales month on month in October, which is a fairly bad start to the fourth quarter. Any thoughts we may once have harboured about early 2018 RBA hikes seem fairly silly right now.”

“The outlook for the rest of the year is not that good either. October services PMI’s are in positive territory, but down from September, and the same is true of the performance of services index. Whilst these are broader service sector measures than just retail sales, they can shed some light on the health of the retail sector. For a bounce in household spending, we may need to see wages in Australia recover. This has been the elusive element of Australia’s economy as the labour market has tightened (like everywhere else on the planet). The Australian consumer looks to have exhausted their ability to keep spending going through increased borrowing. The household savings rate has been falling slowly but steadily since end-2008. That period may be coming to an end. And with household debt to incomes ratios close to 200%, this is long overdue.”

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