Australia: Promising Economic Data

Consensus Forecasts

On the whole, monthly data releases for February were largely positive, thanks to robust retail sales, building activity continuing its steady upturn and a further narrowing of the trade deficit. Reflecting strengthening consumer spending, retail activity leaped for the second consecutive month in February, registering a 1.3% (m-o-m) surge after a similarly large jump of 1.2% in January. Data for the first two months of this year show that the rise in sales was relatively widespread across all sectors and states and marked the strongest start to a year since 2001. The largest contributors to aggregate retail trade growth were food, household goods as well as café and restaurant sales. As for building activity, total dwelling units approvals advanced by 3.1% (m-o-m) in February following two months of contractions. This overall increase, which was up from a 2.0% contraction in January, can be attributed to a 1.5% rise in private sector dwellings (excluding houses), while private sector houses rose by a more modest 0.5%. On the external front, Australia’s trade deficit narrowed in February to A$0.2bn, thanks to a sharp jump in the value of commodity exports. The improved deficit figure followed an upwardly revised trade gap of A$1.2bn in January. The external sector’s better performance was reflected in a 3.3% (m-o-m) rise in total exports, while imports dropped by 0.9%. For 2013 as a whole, the trade deficit is now expected to come in at A$18.2bn.

Separately, Glenn Stevens, governor of the Reserve Bank of Australia, was recently reappointed for another three years. His current term was due to expire three days after federal elections on September 17 2013. The move is seen as favourable given the relative resilience shown by the Australian economy during his tenure.

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