UPDATE 1-Solid Australia retail sales, export boom back steady rates outlook

    * Retail sales rise 0.5 pct in Dec, solid 0.9 pct for Q4 
    * Trade surplus biggest in 2 years as exports to China surge 
    * Reinforces outlook for no more rate cuts, boosts A$ 
 
    By Wayne Cole 
    SYDNEY, Feb 6 (Reuters) - Australian retail sales topped 
forecasts for a fifth straight month in December adding to 
evidence that consumer spending is reviving in time to help 
cushion the economy from a cooling mining boom. 
    Thursday's data from the Australian Bureau of Statistics 
also showed the country boasted its biggest trade surplus in two 
years in December as exports rose beyond all expectations. 
    Despite all the talk of a Chinese slowdown, exports to the 
Asian colossus surged 29 percent to a record A$94 billion ($84 
billion) for all of 2013. 
    The upbeat news supported the Reserve Bank of Australia's 
(RBA) decision earlier this week to shut the door on further 
rate cuts and lifted the local dollar a third of a U.S. cent to 
a one-month peak at $0.8980   . 
    "For the RBA, it is consistent with their view that policy 
is gaining further traction," said Su-Lin Ong, a senior 
economist at RBC Capital Markets. 
    "It sits comfortably with their neutral bias as they wait 
and see how the combination of a lower exchange rate as well as 
lower interest rates work its way through the economy." 
    The RBA dropped its easing bias in part because of signs 
record lows rates of 2.5 percent were feeding through to 
consumer wealth, confidence and spending. 
    After a marked pick up in the second half of last year 
retail sales rose 0.5 percent in December, from the previous 
month to pip forecasts of a 0.4 percent gain. For the whole 
fourth quarter sales rose an inflation-adjusted 0.9 percent. 
    That was a welcome turnaround as the A$270 billion retail 
sector accounts for 17 percent of Australia's A$1.5 trillion in 
annual gross domestic product and is the second-biggest employer 
after the health industry, with 10 percent of all jobs. 
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
    Retail sales, consumption: http://link.reuters.com/zew92t  
    China iron ore imports: http://link.reuters.com/maq95v 
    Resource export forecasts: http://link.reuters.com/kek63v  
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
     
    EXPORTS TO CHINA RUN HOT 
    Another major positive for the economy has been a rapid rise 
in resource exports as mining projects come on stream and demand 
from China remains resilient. 
    Trade figures for December showed total exports climbed 3.7 
percent in the month to an all-time high as volumes of farm 
goods, iron ore and coal all increased. That delivered a trade 
surplus of A$468 million, a marked improvement from the A$300 
million deficit analysts had expected. 
    The country also enjoyed a small surplus for the whole of 
the fourth quarter -- a swing of almost A$3 billion from the 
previous quarter -- which likely made a major contribution to 
economic growth. 
    Exports of goods to China jumped 11 percent in December to a 
fresh record peak, thanks in large part to a sustained 
acceleration in iron ore sales.  
    That trend continued into the new year with shipments of 
iron ore from Port Hedland, Australia's busiest port, up 27 
percent in January from a year earlier despite weather troubles. 
    Exports of liquefied natural gas have also been rising 
strongly and are set to explode over the next few years as major 
projects come on line. 
    "A sharp rise in resource export volumes and a marked 
reduction in resource-related capital goods imports as the 
mining construction boom winds down will drive the move into 
trade surplus," said Michael Blythe, chief economist at 
Commonwealth Bank of Australia. 
    "We may be generating small current account surpluses within 
five years." 
    If correct that would be a radical sea change for Australia 
which has run a current account deficit for 128 of the past 150 
years. The lessened reliance on foreign funding would in turn 
tend to underpin the Australian dollar. 
    "The combination of a AAA rating and a current account 
surplus would likely see the AUD again trade well above parity 
to the US dollar," added Blythe. 
 
 (Reporting by Wayne Cole; Editing by Shri Navaratnam) 
 ((Wayne.Cole@thomsonreuters.com)(612 9373 1813)(Reuters 
Messaging: wayne.cole.thomsonreuters.com@reuters.net)) 
 
Keywords: AUSTRALIA ECONOMY/VIEW