SYDNEY – Australian retail sales rebounded sharply in April, rising at their fastest pace in over two and a half years, slightly easing fears that consumer demand had become sleepy in the first half of the year.
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Cash register sales jumped 1.0% in April from a month earlier, the Australian Bureau of Statistics said Thursday. That was well above the 0.3% rise expected by economists, and represented a stunning recovery after sales fell by 0.2% in March and were flat in February.
Shoppers returned to cafes during April, with food sales also rising, while department stores experienced a strong month.
The volatility can be explained in part by disruptions caused by Cyclone Debbie, which hit Queensland in March, shutting coal exports and flattening crops before moving south to drench Sydney in one of the wettest months on record.
The timing of holidays, such as Easter, might also have impacted the data, economists said.
Economists said those factors would explain some of the bounce in April, but many are still cautious about the health of households in Australia, which are lumbered with record debt, falling wages, and job uncertainty.
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First quarter GDP growth data will be released on June 7, with many economists expecting the economy to show a lackluster performance.
There remain concerns among some that the economy might even contract, as weak consumer demand, weaker house construction, and falling exports put a brake on activity.
"Lacklustre consumer confidence, soft wages growth, constrained pricing power and slowing dwelling prices are still pointing to limited retail spending growth," said Shane Oliver, chief economist at AMP Capital.
Australian household debt has soared to record levels as house prices have climbed over recent years. Business insolvencies have climbed this year adding to doubts about the consumer.
The Reserve Bank of Australia has said it has little scope to lower interest rates further to stoke consumer demand, fearing more cuts will only stoke house price growth.
Earlier Thursday, data showed house prices fell in May, which is likely to add to drag on consumer confidence.
State capital cities saw a cooling of housing market conditions in May with the CoreLogic home value index reporting a 1.1% fall in dwelling values across the combined capitals.
The month-on-month fall was largely the result of declines in Sydney and Melbourne, where housing values have recorded significant gains over the last five years.
Also Thursday, business investment nudged higher in the first quarter, helped by a rise in mining investment.
It was only the second on-quarter rise in investment since 2014.
-Write to James Glynn at email@example.com
(END) Dow Jones Newswires
June 01, 2017 01:26 ET (05:26 GMT)