WA heads field in retail growth

Western Australia continued to record a strong overall trend for retail growth in December despite slowed growth in several categories, according to the latest retail trade figures from the Australian Bureau of Statistics.

The state’s seasonally adjusted retail turnover was nearly $2 billion for the month, up a seasonally adjusted 0.7 per cent from November and equal to New South Wales as the strongest increase.

Nationally, retail trade rose by a seasonally adjusted 0.3 per cent in December, showing a weak trend after 12 months of moderate growth, although the volume of trade was stronger than expected over the three months to December, rising 1.3 per cent.

Retailing in the recreational goods and other retailing categories showed positive signs for the month, while growth in food retailing remained moderate, matched by Victoria, Queensland and South Australia.

Following 14 months of solid upward movement, the upward trend eased to moderate for clothing and soft good retailing, while the trend growth for household goods retailing was weak.

Growth in the hospitality and services sector eased from strong to moderate in December, after 11 months of solid performances.

Meanwhile, building approvals fell by 1.9 per cent nationally, and decreased by 5.3 per cent in WA in December, due to a 22.7 per cent decline in approvals for flats, units and apartments in the state.

However, approvals for detached houses were up by 0.8 per cent in WA.

Other data showed a contraction in the services sector, with the Australian Industry Group–Commonwealth Bank Performance of Services Index reporting this week that services activity in January was unchanged from the previous month, at 49.5, just below the 50-point level at which contraction becomes expansion.

Another indicator, the TD Securities-Melbourne Institute inflation gauge, showed consumer prices to be unchanged in January, having risen 0.3 per cent in the preceding month.

The stagnant price levels were attributed to lower petrol and fruit prices for the period.

The data suggested that drought and last year’s interest rate rises were having a mediating effect on the core rate of inflation.

AMP Capital chief economist Shane Oliver said he expected no further upward movement in rates this year, and even pointed to rate cuts by the end of the year.

“[There will be] no move at all for the next six months at least, and then there’ll be a couple of rate cuts later in the year, so we’ll end [2007] at 5.75 per cent,” he said.

HSBC chief economist John Edwards said the economic data indicated an increase in the cash rate by the central bank was unlikely this year, and said a rate cut was more likely than a rise.

Commonwealth Bank senior econo-mist John Peters said the data suggested the Reserve Bank would not enact a rate rise in the near future.

“The weaker-than-expected inflation data, showing some abatement in underlying prices, suggests that the RBA is unlikely to lift rates again any time soon."