Australian retail sales fell for a second consecutive month in July as the impact of the government's fiscal stimulus showed signs of fading fast, challenging widely held expectations that interest rates will rise before the end of the year.
Housing finance also fell in July, its first monthly drop since September 2008, evidence that recent widespread talk of rising interest rates may have put a brake on demand.
The Australian dollar fell sharply after the retail sales and housing finance data, backing away from earlier one-year highs of US$0.8662, as traders revised lower the prospect for a rate hike at the Reserve Bank of Australia's next policy meeting on Oct. 6.
Retail sales fell 1.0% to a seasonally adjusted $19.62bn in July from $19.82bn in June but rose from $18.65bn a year earlier, the Australian Bureau of Statistics said. Economists surveyed ahead of the announcement on average had expected a 0.5% rise in sales for July. Sales had fallen 0.8% in June on month.
The number of housing-finance approvals in Australia fell a seasonally adjusted 2.0% in July from June, the ABS said. Economists surveyed ahead of the announcement on average had expected a fall of 2.0% in July.