Nov. 3 (Bloomberg) -- Australian retail sales rose twice as fast as economists forecast in September and job advertisements jumped to an 11-month high, boosting expectations the central bank will increase interest rates as soon as next month. Retail sales gained 0.6 percent from August, the ninth monthly increase, the Australian Bureau of Statistics said in Sydney. The number of jobs advertised in major newspapers in October rose 1.4 percent from September to the highest since November 2002, Australia & New Zealand Banking Group Ltd. said.
Rising house prices, consumer confidence and employment have fueled spending at stores such as jeweler Michael Hill International Ltd., Woolworths Ltd., the nation's largest grocer, and Harvey Norman Holdings Ltd., a furniture and electronics retailer. ``Australia has a stable economy with jobs growth, and that's keeping consumer sentiment high,'' Woolworths chief executive Roger Corbett said in an interview last week. ``Coming up to Christmas, there's a great feeling of optimism.'' The yield on the December 90-day bank bill future rose 4 basis points to 5.18 percent at the close of trading in Sydney, signaling investors expect a rate increase before the end of the year. The Australian dollar was unchanged after the report at 70.76 U.S., close to a six-year high. The yield on the 6.75 percent bond maturing in November 2006 rose 2 basis points, or 0.02 percentage point, to 5.61 percent.
Interest Rates
The central bank board meets tomorrow and announces its rate decision on Wednesday. Eleven of 21 economists surveyed by Bloomberg News expect a rate increase in December. A month ago no one was forecasting an increase this year. The Reserve Bank of Australia has left its overnight cash rate target unchanged for 16 months at 4.75 percent, a half percentage point above a 30-year low. ``A quarter point rate increase before Christmas is highly likely,'' said Tony Pearson, global head of economics at National Australia Bank Ltd., the nation's largest lender by assets. ``Domestic economic activity has accelerated sharply in recent months.'' The median forecast of 20 economists surveyed by Bloomberg News was for a 0.3 percent increase in September retail sales following a 1 percent gain the previous month.
Furniture and Food
Sales in the third quarter adjusted to remove inflation rose 2.7 percent from the previous three months, the largest quarterly increase since the first three months of 1999. Economists forecast a 2.2 percent gain. After rising 1.8 percent in the second quarter, it was the largest back-to-back gain on record. Leading the increase in September, sales of household goods rose 1.7 percent and spending at grocery stores increased 0.7 percent. Among companies reporting increased business, New Zealand-based Michael Hill International said sales in the three months ended Sept. 30 rose 10.4 percent to NZ$45.1 million ($28 million), led by a 17 percent increase at its 84 stores in Australia, where it sells almost two-thirds of its jewelry. Last month, Harvey Norman Holdings said its first-quarter sales rose 22.1 percent to A$867.5 million, fueled by demand for plasma televisions, DVDs and furniture. Consumer spending is one of the bright spots for an economy that grew at its slowest pace in 2 1/2 years in the three months to June 30 because of a slump in exports.
Exports Rebound
Exports rebounded in August and September as global economic growth recovered. An index that measures Australian manufacturing rose for a fourth month in October as factories increased output of paper, furniture and machinery. The performance of manufacturing index rose to 57.5 points from 53 points in August, the Australian Industry Group and PricewaterhouseCoopers said in a report released in Canberra. A reading above 50 indicates manufacturing is expanding. Helping fuel spending, Australian house prices rose 18 percent in the second quarter from a year earlier. The economy added 95,300 jobs in August and September and the jobless rate is at a 13-year-low 5.8 percent. Wages are rising faster than the inflation rate. Hourly rates of pay rose 3.6 percent in the second quarter from a year earlier compared with a 2.7 percent increase in consumer prices. Consumer confidence rose 3.2 percent in September, according to Westpac Banking Corp. and Melbourne Institutes monthly survey. //www.bloomberg.com