Sydney, Jan. 15 (Bloomberg) -- Australian consumer confidence rose for a third month in January, helping underpin spending at retailers during post-Christmas sales. The confidence index rose 0.5 percent to a reading of 108.1, according to Westpac Banking Corp. and Melbourne Institute. A reading above 100 indicates more consumers are optimistic than pessimistic about the economy. The index rose 0.3 percent in December and 4.8 percent in November. Rising retail spending will bolster Australia's economy as the worst drought in a century and a global slowdown cut exports. Coles Myer Ltd., Australia's largest retailer, Woolworths Ltd. and others said crowds of shoppers helped them meet sales targets over the post-Christmas clearance period.
``Confident consumers keep spending, and they will support economic growth in 2003,'' said Michael Blythe, chief economist at Commonwealth Bank of Australia. ``The jobs market is good and interest rates are low. That's supporting confidence at a time when the talk is of drought and global tensions.'' Today, Coles Myer's Myer Grace Bros. unit said its holiday clearance sales were better than last year, raising analysts' expectations the money-losing department store chain may have a profit in its first half. ``We had really strong traffic through the stores and we maintained the momentum through the duration of the sale,'' said John Gillman, a spokesman for Myer Grace Bros., Australia's biggest department store chain.
Annual Sale
The company's annual three-week, post-Christmas clearance period ended Monday. ``We had better stock this year, which is why we were able to maintain the momentum,'' Gillman said. Retail sales in December met forecasts of a 4 percent increase from a year earlier to A$18.5 billion ($11 billion), according to Australian Retailers' Association estimates. Last- minute Christmas shoppers and bargain-hunters helped make up for a slow start to the busiest month of the year.
Sales during December account for as much as one-fifth of department stores' annual sales. The sentiment survey polled 1,200 consumers from Jan. 8 to Jan. 12. An earlier retail sales report showed spending in November rose 1.7 percent, more than twice the increase forecast by economists in a Bloomberg News survey. The Australian dollar rose as high as 58.86 U.S. cents, the highest since Aug. 22, 2000, after the report was released. The currency traded at 58.68 U.S. cents at 2:30 p.m. Sydney time.
'Major Positives'
The yield on the 6.5 percent bond maturing May 2013 was little changed after the report at 5.33 percent, down 5 basis points from yesterday. A basis point is 0.01 percentage point. ``The consumer appears set to remain a strong contributor to growth in 2003,'' said Bill Evans, general manager at Westpac. Westpac's Evan's said ``low interest rates and a low unemployment rate have been major positives'' supporting consumer confidence. The economy expanded 3.7 percent in the third quarter from a year earlier, driven by consumer spending and home building. A report tomorrow is expected to show the unemployment rate stayed at 6.1 percent in December, just above its two-year low of 6 percent, according to a Bloomberg News survey of 21 economists. The central bank's benchmark lending rate is just half a percentage point above a 30-year low at 4.75 percent.
Drought Hits Exports
Still, ``global tensions and drought have been major negatives,'' Evans said. A decline in rural exports because of the drought and falling commodity prices widened Australia's trade deficit in November to the largest in two years. A consumer confidence index measuring whether it was a good time to buy a major household item, such as furniture or home appliances, fell 0.7 percent in January after surging 2.7 percent in December. The Westpac survey's measure of the level of family wealth versus a year ago increased 2.5 percent. The measure of confidence in economic conditions for the next 12 months rose 0.6 percent. //www.quote.bloomberg.com