06:35 AM EDT, 07/03/2024 (MT Newswires) -- Australian retail sales came in stronger than expected, growing 0.6% m/m in May, said ANZ Bank.

At face value, it looks like a strong print, but there could be some seasonal factors at play with end-of-financial-year sales ramping up earlier this year, wrote the bank in a note to clients.

The Reserve Bank of Australia (RBA) deputy governor said the Board will be watching the activity data carefully, and Wednesday's data is just one piece of information the RBA will receive before its August meeting.

ANZ will be looking at the next retail sales print (due on July 30) to gauge whether there is any meaningful upward momentum in Wednesday's result. If the June retail data are strong, inflation comes in higher than the RBA's forecasts -- as the bank expects -- and the labor market remains resilient, there is a chance the RBA could hike in August.

That said, ANZ still thinks that the next move in rates will be down, with the RBA to begin cutting in February 2025.

Residential building approvals increased 5.5% m/m in May, following a revised 1.9% m/m increase in April (from -0.3% m/m). Private sector house approvals increased by 2.1% m/m in May from a revised -0.3% m/m in April, while private sector unit approvals increased by 16.3% m/m. Unit approvals also spiked in May last year, suggesting investors may see more modest growth in unit approvals in the next month or two, pointed out the bank.

Housing prices rose 0.7% m/m nationally in June and 3.7% in 2024 so far. Melbourne's housing price growth remains the weakest (down 0.4% in 2024 so far), while Perth's strength continues (+12.0% year-to-date).