Retail sales better than expected, shares rise again, dollar hits three-month high: Economy roundup

The latest retail sales data has surprised economists, with sales for November 2008 rising 0.4% month-on-month, seasonally adjusted. Most economics had expected a 0.3% decline in sales for the month.

The latest retail sales data has surprised economists, with sales for November 2008 rising 0.4% month-on-month, seasonally adjusted. Most economics had expected a 0.3% decline in sales for the month.

Food retailing was the strongest category, rising 0.7%, but department store sales fell 0.4%, clothing and soft goods retailing fell 0.3%, and café and restaurant takings fell 0.3%.

Share rise again

Australia’s sharemarket has continued its bright start to the year. After closing 1.5% higher yesterday, the benchmark S&P/ASX 200 index gained 1.8% in morning trade to be at 3809.3 points at 12:00 AEDST.

Wall Street took perverse delight in the latest statements from the US Federal Reserve, which painted a grim picture of the economy – most commentators expect that will force President-elect Barack Obama to unleash an even bigger stimulus package when he comes to office. The Dow Jones Industrial Average ended last night up 0.69%.

On the local market, resources stocks were the starts again this morning, with BHP Billiton rising almost 4% and Rio Tinto increasing 3.2%. Fortescue Metals Group, Australia’s third biggest iron ore miner, rose 7% in early trade.

But it wasn’t all rosy news for the resources sector, with aluminium giant Alcoa announcing that it will cut production and slash 13,500 jobs, or 13% of its workforce.

Aussie dollar hits three-month high

The Australian dollar continues to show renewed strength, hitting US72.5c in overnight trade.

The dollar is receiving a boost from improved sentiment towards the resources sector and commodity prices, and a growing appetite for riskier assets as investor confidence returns.

The firming gold price has also helped the Aussie.