Australian retail posts strongest rebound in a year

Retail sales rose 1% in June from the previous month, the biggest increase seen since April 2011.

The performance beat market expectations which had a consensus of just 0.7%, according to BBVA, with the pickup in consumer spending attributed to government subsidies such as carbon rebates and benefit checks.

The strong Aussie dollar also contributed to retail recovery.

BBVA noted that the upbeat retail data lifted sentiment regarding the domestic sector, providing a needed boost for the economy as Australia’s exports continue to be weighed down by global headwinds.

"We think in light of the resilience in the economy, the Reserve Bank of Australia (RBA) is likely to keep its policy rate unchanged at 3.50% in its monthly policy meeting on August 7th. On the trade front, Australia’s posted a better-than-expected trade balance in June, with a surplus of AUD 9 million (Market consensus: a deficit of AUD 375 million), as imports declined 2% m/m in the month, thanks to falling oil prices," BBVA said.