Economists have shrugged off a surprise bounce in Australian retail spending in April, with the numbers seen as an aberration flowing from the impact of Cyclone Debbie and shifting timing for Easter.
They expect underlying consumer fundamentals to remain challenging, with weak wages growth and high underemployment likely to continue to drag on consumer spending in coming months.
Data from the Australian Bureau of Statistics on Thursday showed that seasonally adjusted retail spending rose 1.0 per cent to $25.89 billion in April, surpassing market expectations of a modest 0.3 per cent rise.
The rebound follows a weak trend over the previous two months, with revised ABS data showing retail sales fell 0.2 per cent in March and were flat in February.
National Australia Bank economist Ivan Coulhoun pointed to two factors driving the result.
First, a substantial 2.4 per cent bounce-back in retail sales in Queensland, which had been significantly impacted in March by Cyclone Debbie.
Secondly, the significant change in seasonality this year, with the Easter holiday period falling in April, compared to March in 2016.
April's spending gains were helped by stronger business at department stores and a lift in sales by cafes and restaurants.
Cafes, restaurants and fast food sales were up 1.1 per cent, food retailing rose 1.2 per cent, while department stores' sales lifted 2.5 per cent.
"We suspect these rises were partly from stronger Easter-related trading. We don't look for a repeat in May though," Citi economist Josh Williamson said.
Some of it could also be partly explained by households re-stocking food and some durable items following cyclone-related floods that affected around 20,000 homes in late March, he said.
The increased curbs on mortgage lending and higher home loan interest rates indicated there would be some pressure on future household goods retailing, he added.
The strong numbers come amid concern that consumers have been shying away from spending because of a heavy household debt burden and soft wages growth.
In May, the Reserve Bank of Australia said its biggest concern about a possible property price shock is that it could cause a sharp drop in household spending.
Thursday's strong retail numbers had an immediate impact on the Australian dollar, which initially jumped following their release but then fell back after weaker-than-expected Chinese manufacturing data.
The local currency had risen as high as 74.53 US cents at 1141 AEST, compared to 74.25 US cents immediately before the 1130 ABS figures' release, before declining.
Mid-morning, China's Caixin Performance of Manufacturing Index came in below expectations at an 11-month low.
By 1405 AEST, the Australian dollar had slipped to 73.97 US cents.
