Retailers in line for festive cheer

INCREASED consumer confidence and spending should give retailers a warm glow going into the crucial Christmas shopping season, even if the presence of internet giant Amazon sent a chill down the spine of some.

The Reserve Bank was not about to upset the apple cart, keeping the cash rate at a record low 1.5 per cent after its monthly board meeting yesterday, as expected by economists.

“The low level of interest rates is continuing to support the Australian economy,” central bank governor Philip Lowe said.

“One continuing source of uncertainty is the outlook for household consumption ... incomes are growing slowly and debt levels are high.”

Still, figures showed retail spending grew 0.5 per cent in October, the largest monthly rise since May, having suffered a torrid time in the intervening months.

Australian Retailers Association executive director Russell Zimmerman said annual retailing growth of less than 2 per cent was “extremely disheartening”.

However, Mr Zimmerman still expects the Christmas spend-up to reach a forecast $50 billion worth of sales in the six weeks of the seasonal shopping period.

“Things are looking pretty good at the moment, I won’t be surprised if that $50 billion is beaten,” he told Sky News.

The retail data coincided with the weekly ANZ-Roy Morgan consumer confidence index, rising 0.7 per cent.

However, today’s national accounts for September quarter — a comprehensive guide to the state of the economy — is expected to show more mod- est household spending compared to the previous quarter.

Economists expect overall economic growth to have expanded by 0.7 per cent in the September quarter, which would take the annual rate to 3 per cent. This would be up from 1.8 per cent as of the June quarter.

Dr Lowe said the bank’s central forecast was for GDP growth to average about 3 per cent over the next few years.

It was the Reserve Bank’s final board meeting of the year, and it will not gather again until February.