Australia Retail Sales Hit Record, Underlining Economic Momentum

(Bloomberg) --

Australian retail sales jumped for a third consecutive month to hit a record, driven by a spending revival on the nation's flood-ravaged east coast and highlighting the economy's strong underlying momentum.

Sales surged 1.6% in March to A$33.6 billion ($23.9 billion), more than triple economists' forecast for a 0.5% increase, Australian Bureau of Statistics data showed Wednesday. The ABS will release quarterly figures on May 10.

The result sparked a sell-off in bonds, sending yields on the three-year benchmark up 10 basis points to 3.11%. The Australian dollar also advanced, trading 0.2% higher at 71.07 U.S. cents at 11:53 a.m. in Sydney.

The data highlight the resilience of Australian households -- a pillar of the A$2.2 trillion economy -- which are grappling with elevated inflation, rising interest rates and a cooling property market.

The Reserve Bank of Australia on Tuesday initiated its first tightening cycle in more than a decade with a larger-than-expected 25 basis point rate increase to 0.35%, and signaled further hikes ahead.

“These data suggest that consumer demand remains resilient,” said Sean Langcake, head of macroeconomic forecasting for BIS Oxford Economics. “Given the relative strength of the labor market and the elevated savings rate, we expect consumption growth will be robust over 2022.”

Every state and territory except South Australia posted a rise in sales, with Queensland and New South Wales leading the gains following the recovery from flooding and extreme rainfall in late February and early March, the ABS said.

Separate ABS data showed home loan approvals jumped 1.6% in March, confounding expectations for a 1.9% drop.