Australia Retail Sales Higher Than Expected In December

Australia Retail Sales Actual 3.8%, Expected 0.3%, Previous 0.4%

Release Explanation: This release is a very important set of figures that make up a large percentage of consumer spending numbers. Retail sales are the measure of the total sales of goods and services by retail stores. Retail Sales is an important measure of consumer spending and inflationary pressures. A currency will be impacted by this report over time as it reveals the strength of the public in their ability, or desire, to spend. Steady increases in retail sales apply significant inflationary pressures to consumer prices. With retail trade being the foremost indicator for consumer spending, this figure is extremely important in understanding the economy.

Trade Desk Thoughts: Retail sales in Australia have increased by 3.8 percent in December which is sharply higher than analysts forecasts of a 0.3 percent increase and follows a 0.4 percent increase seen during November. December saw the largest monthly, seasonally adjusted, percentage increase since August of 2000. All industries saw an increase during December with a range of 9.9 percent for household good retailing, and a low of 1.4 percent for food retailing.

The Federal Government Economic Security Strategy Package implemented in December 2008 has impacted on Australian retail turnover. If the trend estimates in this publication were to be calculated without fully accounting for this irregular event, they would be likely to provide a misleading view of the underlying trend in retail activity. Until data is available in future months, it is not possible to determine the trend in retail turnover through the period affected by the stimulus package. As a result, the retail trend series have been suspended as at November 2008.

Forex Technical Reaction: The Australian dollar weakened significantly after this announcement. The pair fell 30 pips in the proceeding 30 minutes and is currently at .6479.

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