Wednesday, January 6, 2010

Retail sales: What the economists say

January 7, 2010 - 11:07AM

Helen Kevans, Economist, JPMorgan

"It looks like despite that (retail) discounting, volumes remained very strong and that underpinned the good results on the retail number. It reaffirms our views that the RBA will hike again in February by 25bps and there will be a string of rate hikes throughout 2010.

"Rates at the moment are just too low for an economy that has proven very resilient and has come out of a global recession rather unscathed. We expect rates at 4.5 per cent mid-year and 5 per cent by year-end."

Michael Blythe, Economist, Commonwealth Bank

"It certainly shows the improvement in consumer sentiment has more than offset the first couple of rate rises. The only downside is that the Christmas trading session did not sound quite as good.

"This shows the Australian economy is certainly on a recovery path. It will certainly revive speculation that the RBA will come back and give us a rate rise in February.

"We have a 25-basis-point rate rise written in for February, with a forecast for rates at 5 percent by the end of 2010."

Brian Redican, Senior Economist, Macquarie

"It is quite extraordinary how strong sales were in November. And it was across all states and all sectors. Along with strong car sales, it sets up the quarter for a very good pick up in private consumption. That should allay concerns that spending would wane now the stimulus cheques had stopped coming and rates were rising. As such, it's another tick in the box for a rate rise in February."

Adam Carr, Chief Economist, ICAP

"There has been a debate about the strength of consumers (and) today's number ends once and for all that debate. Consumers are strong and will continue to be strong.

"Unless we see a significant moderation in the quarterly growth rate, the RBA will be tightening again in February by 25bps. I see interest rates at 4.5 percent mid-year, and 5-5.25 percent by end of the year."


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