Update Retail sales surged in the June quarter despite a drop for June alone, adding to recent signs of the economy's strength. House prices also rose.
Sales fell 1.4 per cent in June to $19.4 billion, from a reported gain of 1 per cent in May, according to the Australian Bureau of Statistics. Analysts had expected a 0.5 per cent increase.
''It's being driven by big a drop in department stores and apparel sales,'' said RBC Capital Markets economist Su-Lin Ong. ''It's possible that some of the stimulus effect is wearing off slightly. There may be a little bit of a drop off going forward.''
In June, department store sales dropped 8.8 per cent, while clothing and soft goods fell 7.4 per cent. Food sales dropped 0.7 per cent, while cafes declined 1.7 per cent.
Sales of household goods increased 2.9 per cent for the month.
The dollar initially fell on the news, losing about 0.2 a US cent to 84.20 US cents, before bouncing back to about 84.5 US cents.
For the quarter as a whole, though, the figures were more promising. Retail sales for the period increased 2 per cent to $55 billion in seasonally adjusted volume terms, beating economists' estimates of a 1.3 per cent rise for the period.
That quarterly result would add about 0.4 percentage points for gross domestic product growth the April-June period, Ms Ong said. Such an outcome would help the economy continue its expansion.
On a quarterly basis, nearly all states increased sales volumes with Victoria and Queensland both advancing by 2.4 per cent and NSW by 2.3 per cent.
The Northern Territory fell 2.9 per cent.
RBA, house prices
Recent economic data released at home and abroad have indicated that the worst of the global economic slowdown may soon be over - if it isn't already.
Other figures out today from the ABS showed house prices rose nationally 4.2 per cent in the June quarter, from a revised 1.5 per cent fall in the first quarter. The June quarter increase is more than double than the 2 per cent increase expected by economists.
Home prices gained 4.9 per cent in Sydney and 5.2 per cent in Melbourne in the quarter, ABS said. Brisbane house prices rose 2.5 per cent, while Perth's rose 2.7 per cent.
''House prices surprised to the upside,'' said Ms Ong. ''That's something the Reserve Bank would be a little uncomfortable with.'' RBA governor Glenn Stevens flagged the risk of rising home prices creating a housing price bubble in a speech last week
The Reserve Bank of Australia board meets today with analysts united in expecting the central bank will leave its key cash rate unchanged at a half-century low of 3 per cent when it releases its rates verdict a 2.30pm, Sydney time.
''After the thinly veiled warning last week from the RBA Governor - that accommodative policy could produce another asset bubble - the risk is that house price data will become the new 'variable to watch' when assessing the stance of monetary policy,'' said TD Securities economist Annette Beacher.
czappone@fairfax.com.au
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