Retail sales fall, but building approvals rise

Australia’s retail sales fell by 2 per cent in February, but building approvals rose by 7.8 per cent.

These- seasonally adjusted – figures, just released by the Australian Bureau of Statistics, were heavily affected by both the global economic crisis – and steps the Federal government has taken to counter it.

Retail sales had held up perhaps surprisingly well, until today’s figures were released.

On revised figures, the nation had a 0.5 per cent rise in these sales in January after a 3.8 per cent increase in December.

The bureau’s latest figures, which are also seasonally adjusted, showed that all States and Territories – except Tasmania – suffered falls in their retail sales during February.

These falls ranged from 0.1 per cent in the Northern Territory to 2.7 per cent in Western Australia.

Tasmanian shopkeepers, though, saw their trade rise by 1.3 per cent.

The nation’s Department stores took the biggest hit, with a 9.8 per cent fall, while those selling household goods saw their sales fall 3.8 per cent.

On raw figures, Australia’s retail sales plunged 12.9 per cent in February, while chain stores and other big retailers saw their sales plummet 16.3 per cent during the month.

The Federal government’s decision to treble its First Home Owners’ Grant, combined with lower interest rates, helped to maintain building approvals during February.

Even so, on trend figures, home building approvals fell by 2 per cent during the month.

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Business lending tight. Rate hopes rise

Business credit went backwards in February, shrinking by 0.6 per cent during the month.

This was the second time, since the global financial crisis struck last September that this has happened.

Reserve Bank statistics, released yesterday, show that business credit also fell by 1.1 per cent in November.

As the bank has just produced raw figures, this time, its bulletin does not show whether Australia’s banks got scared and  stopped lending to business, or whether it was business, itself, which reduced its borrowing.

Either way, these figures are a sign that the global crisis is now hitting Australia hard.

However home lending continued to grow in the month, mainly for owner occupied housing.  The bank’s figures show this rose by 1 per cent during the month.

Lending for investment homes, though, fell by 0.2 per cent.

An RBA  deputy governor Ric Battellino attributed the rise in owner occupied housing loans to a combination of the Federal government’s  expanded first home  owners’ grant and lower interest rates.

But he also warned that  Australia’s gross domestic product is likely to fall this year.

That implies a recession, a word that the Prime Minister, Kevin Rudd, and his senior ministers have been very reluctant to use.

Mr Battellino also signalled that another rate cut is likely, when the Reserve Bank board meets next Tuesday, to review Australia’s  interest rates.

“…there remains scope to ease policy further if  circumstances require,” he  said.

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