Australian retail sales ran hot in May as government fiscal stimulus and interest rate cuts to offset the global financial crisis continued to wash through store checkouts. But building approvals hit a wall in May, a likely reflection of rising concern about unemployment over the medium term, economists said.
Retail sales rose 1.0% in May from April to a seasonally adjusted $19.55bn, the Australian Bureau of Statistics said. It added to a 2.2% rise in March and a 0.3% rise in April.
Economists surveyed ahead of the announcement on average had expected a 0.5% rise in sales for May. "I think it does show that economic stimulus is working, but as we've said repeatedly, we're not out of the woods yet. This global recession has some way to go, but it's an encouraging sign," Australia's Treasurer Wayne Swan told reporters in Queensland.
Department store sales rose 5.5% in the month, supported by a 2.9% rise in clothing sales, while business at cafes and restaurants got a 1.4% boost.
The total number of houses and apartments approved for construction fell a seasonally adjusted 12.5% in May, the bureau said. Private sector house approvals fell 2.0% while private sector other dwellings (apartments, smaller homes) fell 43.6% to their lowest level since April 1987.