Australian household spending swung back to growth in January, driven by services, though the balance of trade unexpectedly narrowed.
Household spending was up 0.3%, the Australian Bureau of Statistics (ABS) said today. This represents a rebound from an 0.5% loss in December, but was just below economists’ projection of 0.4% growth.
“Household spending returned to growth in January, rising in five of the nine spending categories,” said ABS head of business statistics Tom Lay. “Spending on services drove the rise, up 1.0 per cent driven by Other services including Digital streaming services and Travel agency and tour services.”
Spending on goods dropped by 0.3%, largely due to decreases in spending on vehicles and recreation products. Essential spending climbed 0.8%, driven by higher health and dental spending.
In a separate release, Australia’s balance of trade fell by A$742 million to reach $2.631 billion, meanwhile, under estimates of $3.78 million. Exports fell 0.9% due to a 5.2% drop in rural goods exports.
Imports increased by 0.8%, improving from a 1.8% decrease in December.
This follows yesterday’s gross domestic product data. GDP rose by 0.8% with annual growth up 2.6%, well above estimates.
These data releases will be the final meaningful reports before the Reserve Bank of Australia meeting on 16-17 March. Inflation remains in line with expectations, and the strong GDP data may remove pressure to hike rates this month, per Commonwealth Bank analysts.
“We still expect the RBA to lift the cash rate in May and stay on hold in March, but a lively debate is expected,” they wrote.
