RBA decision to maintain cash rate a good sign: ARA

Posted by Editorial on 3rd March 2009

Retail industry body the Australian Retailers Association (ARA) said the Reserve Bank’s decision to leave the cash rate unchanged at 3.25 per cent signalled Australia’s economic conditions were stabilising.ARA Executive Director Richard Evans said the Reserve Bank’s positive indication of economic recovery was confirmed by January retail trade growth of 0.2 per cent, reflecting a year-on-year growth of approximately 6.5 per cent.

“Seasonally adjusted retail trade growth for January (NSW 1.9%, Vic -1.8%, Qld 0%, SA 0.1%, WA 1.4%, Tas -2.9%, NT -0.2%, ACT 1.5%) showed signs of consumers returning from financial hibernation and responding to positive economic influences including the lowest interest rates since the 1960s and the Federal Government’s first stimulus package in late December,” he suggested. “Food was even stronger with a 1.5 per cent increase in January equating to a year-on-year increase of nine percent.”

“There is more good news on the way for consumers with the Federal Government’s second stimulus package planned to hit bank accounts from March but the mitigating factor for economic recovery is employment,” Mr Evans added.

“Retailers including Woolworths, Bakers Delight and Aldi have announced significant job creation over the next year but we’re urging employers right through the supply channels to hold onto their staff who have the key to economic recovery in their pockets.”

“If unemployment levels remain at approximately five per cent, the retail sector should see improved growth return by the September 2009 quarter, but the rest of the economy lags three to six months behind the retail cycle. This means there may not be good news for other industries until December 2009/January 2010,” Mr Evans advised.