Retail sales for March increased by 0.5% in March, above the market forecast of 0.3%. This follows a decrease of 0.1% in February 2008 and a revised no-change in January 2008.
But the headline figure disguises weakness across the retail sector; all sub-sectors, except the food retailing sector and household good retailing sector (which both posted seasonally adjusted increases of 1.7%), had a decrease in the seasonally adjusted estimate in March.
The retail trade data and yesterday’s 5.7% drop in building approvals will add pressure to the Reserve Bank to leave rates on hold when it meets next Tuesday. Indeed, Westpac’s new chief executive Gail Kelly predicts the next interest rate movement is likely to be down, although that may not occur for 18 months.
The credit crunch is likely to have a big impact on the next movement in rates. Satyajit Das, a derivatives expert who warned of a global slowdown in credit markets two years ago, told a Financial Services Institute of Australia event that tight credit conditions have some way to run. “It’s a matter of years, not a matter of months.”