Australian Retail Sales plummeted 2.0% in February, overshooting expectations that the figure would fall by only -0.5% on a seasonally adjusted basis. Spending weakness isn’t much of a new concept in Australia, as sales also shrunk five months ago in September and in the June right prior. Sales haven’t been this weak since Jul. 2000.
Contracting spending may be a symptom of fiscal stimulus’ dying strength. As noted above, this is the first time in five months that this particular figure of economic activity shifts into negative territory. For the ending months of 2008, the metric was in positive territory as the first government stimulus made its way into the pockets of workers and families. An addition to the vernal stimulus was implemented in January, but as February shows, the effort has failed to generate much needed confidence.
The sharp move comes in contrast to comments made by a Treasury official on Monday. In it, he said that the government’s cash stimulus payments would be keeping consumption above its mid-2008 level, regardless of the economy’s dwindling output.
Australia’s economy contracted 0.5% in the final three months of 2008.
Al Bawaba
