Weaker discretionary spending dragged retail sales lower in September as the stimulus from the federal government’s cash payments receded.

The result is likely to encourage the Reserve Bank of Australia (RBA) to leave interest rates unchanged in December, after hiking in each of October and November, economists said.

Retail sales fell 0.2 per cent in September to a seasonally adjusted $19.719 billion, the Australian Bureau of Statistics (ABS) said on Wednesday.

Over the September quarter, retail sales fell by 0.4 per cent in seasonally adjusted volume terms.

The monthly fall confounded market expectations for a rise of 0.5 per cent, while the quarterly decline was as expected.
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First home buyers now comprise a record proportion of the residential housing market after responding to low interest rates and the government’s revamped assistance package, economists say.

First home buyers made up 27.5 per cent of all home loans in March, a record since the Australian Bureau of Statistics (ABS) began the data series in 1991, and compared with 26.5 per cent of the total market in February.

The ABS data also showed that the housing market has recovered to its February 2008 levels, when interest rates were still being raised by the Reserve Bank of Australia (RBA) before a series of monthly cuts since September to a 49-year low last month.

The number of home loans for owner-occupied housing jumped to a 13-month high of 59,793 in March.
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Australians are becoming savers again because of the economic slowdown and fears of a possible recession, an economist says.

JP Morgan chief economist Stephen Walters said the rise in the household saving ratio was due partly to worries about the domestic economy and possible job losses.

“People anticipate that things are going to get grim and that they may even lose their jobs,” Mr Walters said.

“The natural reaction to that is increase your savings.”
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As the debate over a $US700-billion ($A840 billion) bank bail-out rages on in Washington, one of the largest US banks — Washington Mutual Inc. — has collapsed under the weight of its enormous bad bets on the mortgage market.

The Federal Deposit Insurance Corporation seized WaMu yesterday, and then sold the thrift’s banking assets to JPMorgan Chase & Co. for $US1.9 billion ($A2.28 billion).

Seattle-based WaMu, which was founded in 1889, is the largest bank to fail by far in America’s history. Its $US307 billion ($A368 billion) in assets eclipse those of Continental Illinois National Bank, which failed in 1984 with $US40 billion in assets; adjusted for 2008 dollars, its assets totalled $US67.7 billion ($A81.2 billion). IndyMac, seized in July, had $US32 billion ($A38.4 billion) in assets.
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Investment bank JP Morgan says Australia’s top four banks could lose more than a combined 500 million dollars if they don’t follow the lead of St George Bank and again raise their standard variable home loan rates.
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