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UPDATE 1-Australia's Nov retail sales bounce a boon for Q4 GDP

Published 11/01/2019, 01:24 pm
Updated 11/01/2019, 01:30 pm
© Reuters.  UPDATE 1-Australia's Nov retail sales bounce a boon for Q4 GDP
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* Nov retail sales +0.4 pct vs +0.3 pct Reuters poll consensus

* Retail sales growth at 5-month high

* Bounce signals consumer spending likely added to Q4 GDP

* Australian dlr rises 20 pips just after data to 1-mth high (Adds economist quotes)

By Swati Pandey

SYDNEY, Jan 11 (Reuters) - Australian retail sales jumped to the highest in five months in November bolstered by pre-Christmas shopping, an indication private consumption boosted economic growth in the final quarter of 2018.

Retail sales rose a seasonally adjusted 0.4 percent in November from October, data from the Australian Bureau of Statistics (ABS) showed on Friday, better than a modest 0.3 percent rise forecast in a Reuters poll. October sales were unrevised to show a 0.3 percent gain.

The bounce, which follows a very tepid third quarter, will be welcomed by policymakers who have been looking for signs of resilience in the household sector in the face of falling property prices and snail-paced wage growth. stronger-than-expected outcome was enough to send the Australian dollar AUD=D4 about 20 pips higher to $0.7205, a level not seen since mid-December. It was last at $0.7196.

Household goods retailing and clothing led the rises with gains of 1.2 percent and 1.5 percent, respectively, boosted by strong promotional activity, including Black Friday sales.

"The result sets up a better quarterly profile for household consumption," said Josh Williamson, Sydney-based economist at Citi.

Retail trade is now up 0.8 percent in the two-months to November compared with just 0.3 percent for the first two months of the third quarter.

"Even if there was no retail trade growth in December, Q4 would still produce a better nominal growth rate than Q3," Williamson added.

"This provides some early support for a better contribution to (economic growth) from household consumption at the end of last year."

Australia's A$1.8 trillion ($1.3 trillion) slowed more than expected to an annual 2.8 percent in the September quarter as consumers tightened their purse strings. retail sector has suffered, as a result amid a downturn in the country's once-red hot property market, sluggish wage growth and stratospheric household debt.

In a sign of the times, a string of Australian retailers have gone under recently including Marcs, Pumpkin Patch, Payless Shoes and Roger David while department store Myer MYR.AX has been struggling to turn around.

Just this month apparel retailer Kathmandu KMD.AX posted weaker-than-expected Christmas sales in Australia and New Zealand, disappointing investors who sent its shares to 10-month lows. the Reserve Bank of Australia (RBA) has singled out household consumption as a "continuing source of uncertainty" with wage growth stuck at around 2 percent.

That is one reason it has left interest rates at a record low 1.50 percent since last easing in August 2016. think that the outlook for consumption is downbeat," said Marcel Thieliant, senior economist at Capital Economics.

"We expect jobs growth to slow and wage growth will probably strengthen only slowly. And falling housing wealth means that consumers may want to lift rather than run down savings."

($1 = 1.3906 Australian dollars) (Editing by Jacqueline Wong)

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