A shopper walks past a retail store displaying sales signs in central Sydney. Photo: Reuters

SYDNEY: Australian retail sales surprisingly fell last quarter while growth in September was weaker-than-expected, underlining the need for even more stimulus to jumpstart the slowing economy.

Retail sales inched up 0.2 percent in September after a respectable 0.4 percent gain in August, figures from the Australian Bureau of Statistics (ABS) showed yesterday. Analysts polled by Reuters had expected an increase of 0.5 percent.

Quarterly data showed sales slipped 0.1 percent in inflation-adjusted terms in the three months to September following an already sedate June quarter. Analysts were looking for a 0.2 percent rise.

Retail volumes have now recorded falls in three of the past four quarters to be down 0.2 percent from a year ago. The last time annual volumes were this weak was in the early 1990s recession.

In another worrying sign for the economy, separate data yesterday showed Australian job advertisements in newspapers and on the internet fell 1 percent in October to the lowest level in more than 2-1/2 years.

The gloomy figures knocked the Australian dollar off a near three-month peak to $0.6904.

“The fall in real retail sales in the third quarter underlines that the RBA still has more work to do,” said Marcel Thieliant, Singapore-based senior economist at Capital Economists.

The Reserve Bank of Australia (RBA) last month chopped its benchmark rate for a third time this year to a record low 0.75 percent in a bid to revive employment growth, consumer spending and inflation.

GDP growth would continue to fall short of potential next year and the RBA “will have to cut interest rates by more than most anticipate”, he added.

Australia’s annual gross domestic product (GDP) growth has weakened to the slowest in a decade and indicators so far suggest the lacklustre momentum could continue for a while. Third-quarter GDP data is due next month.

Investors are looking ahead to the RBA’s monthly policy meeting due at 0330 GMT on Tuesday, where it is likely to stay on the sidelines as it awaits the impact of its stimulus so far.

Financial futures are pricing in a 60 percent chance of a cut to 0.5 percent early next year, with some economists speculating the need for unconventional policy measures or quantitative easing (QE) such as bond purchases or discounted lending to banks.

“We expect the RBA to embark on some form of QE. This could come as early as February 2020,” Citi economist Josh Williamson wrote to clients last week.

“With bank pass-through of conventional policy to lending rates becoming constrained, our forecast for the next cash rate move in February 2020 implies that this date is the first opportunity for the RBA to announce a QE programme.” – Reuters

A shopper walks past a retail store displaying sales signs in central Sydney. Photo: Reuters