Retail sales in Australia unexpectedly dropped and building approvals declined more than forecasts

Retail sales in Australia declined in May opposing analyst's expectations, despite the Australian economy has started to give some optimism signals as the export of iron ore and coal to China and other Asian economies surged. This is the second drop for retail sales in three months coming after a decline in household spending affected by increasing unemployment rate.

Today's drop in retail sales may force monetary policy makers in Australia to keep interest rates at its current level at 4.75%, while the governor Stevens said that keeping borrowing costs unchanged for a year. More rate hikes still anticipated but it may be delayed for sometime as the reserve bank may find it threatening domestic demand.

Australia's retail sales index has dropped by 0.6% during the month of May, compared with a previous reading that inclined to 1.1%, which was revised to 1.2%, while the expectations referred to 0.3%. 

Still the first half look for the Australian economy indicated that the economy is in a stumbling phase as the natural disaster that hit the nation during the first half of the year, which led the retail sales to record a drop in three consecutive months.

Furthermore, the consumers spending on clothing and footwear has slumped 1.8% and consumers spent fell 1.4%. Weak household spending will force the Australian Reserve Bank to keep its benchmark at 4.75% in July.

Moving to the building approvals, which recorded another drop in May as the employment rate weakened. building approvals in Australia retracted for the third time in four months during the month of November, adding to signs of recession in the Australian economy in the second quarter, confirming that the Reserve Bank of Australia to leave interest rates unchanged at their level until the year's ending.

Australian building approvals slumped to -7.9% during May which compared with the pervious decline by 1.3% that revised to 8.6%, while the actual reading came lower than market's forecasts that predicted of -0.5%.

Moreover, annualized building approvals retreated to -14.4% in May, from a -11.5% last year, revised to -12.3%, where the anticipations estimated of -5.6%. 

On the other hand, the Australian currency (Aussie) has affected by today's data, which slumped against the counterparts, which declined sharply against the US dollar during the Asian session.