Australian retail sales posted better than expected numbers for the month of February. Retail sales rose by .7 per cent in February, which was .3 per cent higher than what economist had been projecting. Analysts attribute the rise in retail sales to the strong growth in household goods and food sales. The positive data coincided with an interest rate cut by the RBA. The rate decrease was the first in 18 months and slashed the cash rate down to a record low of 2.25 per cent. This, combined with low oil prices, helped spur consumer spending in Australia. The housing market boom was also aided by the interest rate cut, as well as sales of goods such as whiteware and furniture.
Not all of the recent data was positive. Department store sales fell 3.2 per cent, the biggest fall since August. Economists have attributed this to low consumer sentiment as the mining boom tapers off. The January sales figures were revised as well, from .4 per cent to .5 per cent. JP Morgan economist Tom Kennedy believes another interest rate cut is likely, considering the moderate success of the first interest rate cut. "We think the underlying drivers are obviously a pop in sentiment following the RBA cut in February and also some benefit from low petrol prices," Mr Kennedy said. National Australia Bank senior economist David de Garis attributed to better than expected retail sales figures to other factors such as the improved labor market. “We've seen a bit of improvement in the labour market, employment growth has picked up a little," Mr de Garis said. "Consumers are probably a little bit less worried about the labour market. There are little hints of less anxiety starting to creep in there.”