The ABS just released retail sales data for April and the outcome of +1.1% was way beyond market expectations of a rise of 0.4% with last month’s fall of 0.5% being revised to only -0.3%.
These are unequivocally strong and unexpected numbers and will complicate the outlook for the market, which doesn’t think the RBA is going anytime soon but equally this will embolden the bullhawks. Already the Aussie is up 50 points from its lows this morning and 3 year swap rates are a little higher also.
The break up of the retail sales showed all sectors except cafes and restaurants strong but big and distinct state based moves which is interesting but means nothing for RBA deliberations.
So, to the charts:
The important thing here for retailers, monetary policy and the RBA’s idea that savings are transitory and spending will return is the uptick in the trend series which is back toward what would be considered fairly solid levels.
By state we can see that Victorians were on a tear but NSW remains in the doldrums and Queensland has recovered from last month pretty well also.
Looking at the sectoral breakdown we talked about above we can see the strength in department stores and “other” but in general this is a fairly even spread across the board.
All in all you would have to say, on this data, that the interest rate hawks will feel both vindicated and in the ascendancy. It still seems too soon for June but the RBA will be watching the data flow closely to confirm its opinion that the GDP data we saw yesterday is behind us and the bounce they expect is on its way.