Retail sales have increased by a seasonally adjusted 0.3% in August, slightly below analyst expectations of an 0.4% rise.
The modest rise, which comes after a revised 0.7% increase in July, suggests retailers are likely to remain under pressure for the remainder of the year, and will be hoping for a busy Christmas period to springboard into 2011.
Sales grew fastest in Victoria at 0.8%, followed by New South Wales at 0.7% and Queensland at 0.4%.
While retailers remain under pressure, new research on the services sector suggests growth also remains sluggish.
The Australian Industry Group and Commonwealth Bank performance of services index fell 1.9 points to 45.6 in September, the lowest since July last year and well below the 50.0 threshold that separates growth and contraction.
AIG chief Heather Ridout says the September results were impacted by a variety of factors, including tentative consumer spending, uncertainty relating to the election, the further removal of government stimulus measures and the threat of rising interest rates.
Ridout wants the RBA to stay firmly on the sidelines when it meets this afternoon.
“The pressures on businesses across the services sector would intensify if interest rates were to rise when sales are sluggish and employment in the sector is waning.”
Despite some continuing signs of weakness in the global economy, employers are clearly feeling far more confident about the future, with ANZ’s job advertisement series showing job ads rose in September for the fifth straight month.
Total number of jobs advertised in major metropolitan newspapers and on the internet rose by 0.7% in the month, to a seasonally adjusted average of 177,380 per week.
Shares down ahead of rates decision
The Australian sharemarket has lost ground ahead of today’s rates decision, with the benchmark S&P/ASX 200 index falling 0.94% or 43.5 points to 4581.80.
All the major banks lost ground, while BHP Billiton shares were down 1.4% to $39.46 and News Corp shares lost 1.5% to be at $15.57.
Foster’s and Westfield were among the best performers of the morning, while shares in TPG Telecom lost 3.9%.
While consumers might not be prepared to spend up at the shops, they are not afraid of a few big-ticket purchases.
September vehicle sales figures from the Federal Chamber of Automotive Industries show sales increased 9% to hit 85,054 in September.
The Chamber now expects total sales for 2010 will be over one million compared to its earlier forecast of 980,000.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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