Australia's retail sales exceeded expectations in October, sending mixed signals on the economy following below-view economic growth figures earlier this week.
Retail sales rose 0.4 percent from the month before, above expectations for a flat reading in a Reuters poll, and compared with September's upwardly revised 1.3 percent increase.
"Momentum in retail sales is solid after the dim dark years of 2010-13 for retailers. Clearly the combination of low interest rates, gains in household wealth and new home completions are helping offset soft consumer sentiment and news of rising unemployment," said Shane Oliver, head of investment strategy and chief economist at AMP Capital.
"The reversal of the "two speed" economy is also clearly evident in the retail sales data with NSW shooting the lights out with 9.8 percent growth in retail sales over the year to October and Victoria solid at 6.1 percent growth, but Western Australia now languishing with just 2.7 percent growth over the same period," he said.
Goldman Sachs welcomes the improvement in recent sales momentum. "If it can be sustained through the Christmas period, we believe there will be some additional tailwinds building in 2015 to sustain momentum through the course of the year," it said in a note.
However, it warned that "there are reasons to remain cautious in the very near term.. given still low levels of confidence, income headwinds, and confirmation in yesterday's National Accounts data that the positive signs in the monthly retail sales data did not translate to the consumption component of (gross domestic product) in 3Q 2014."
Trade data released at the same time showed imports fell a seasonally-adjusted 2.0 percent from September, while exports rose 2.0 percent. This brought the trade deficit to 1.32 billion Australian dollars, compared with expectations of a 1.9 billion deficit.