SYDNEY, Jan. 10 (Xinhua) -- The firmer trend in Australia's retail sales suggests the two latest central bank rate cuts are beginning to work, though concerns linger over long-term growth with continued weak wage growth and falling savings ratio, Commonwealth Bank of Australia (CBA) said Tuesday.
Retail trade continued its upward trend for the third consecutive month, up 0.2 percent in November though year-on-year growth was up only 3.3 percent, strong signs before the holiday sales period.
Annualizing the growth rate over the past four months - up 6 percent - is well above the 10-year average of 4.5 percent, CBA's economist Kristina Clifton said in a note, showing the two interest rate cuts of 2016 are "having the desired effect and encouraging stronger spending."
"However with wages growth still weak and the savings ratio falling, there is a limit to how quickly spending can continue grow in the near term," Clifton said.
The Reserve Bank of Australia (RBA) eased policy by 50 basis points over 2016, however both times the board was concerned over their impact on the then looming two-speed economy, where New South Wales (NSW) and Victoria state power ahead of those more reliant on mining investment.
Retail sales figures show Australia is indeed in that trap, with NSW and Victoria up 0.5 percent and 0.4 percent respectively, while Western Australia (WA) and South Australia (SA) weakened by 0.65 percent and 0.4 percent respectively.
"In annual terms NSW (4.3 percent) and the Australian Capital Territory (6.4 percent) have the strongest growth rates which is no surprise given the low unemployment rates in these states," Clifton said.
"In contrast, retail trade is down 0.6 percent in WA over the year as consumers remain reluctant to spend in the face of job losses and falling house prices this year."
The November figures are a solid precursor to the more market-focused December and January retail figures (released in February and March respectively) where a more comprehensive assessment on Australia's consumer economy can be made.
The next RBA policy meeting is on Feb. 7.
