Below trend growth to continue
Retail sales have been resilient recently, given restrictions on consumer activity and the large hit to the Australian economy.
This month we continue our podcast series to accompany the NAB Cashless Retail Sales Index. It’s a short, 10 minute podcast, designed to give you a quick summary of the major drivers of the index this month. Listen to the full podcast now. If listening on a mobile device, click listen in browser.
NAB Chief Economist, Alan Oster commented:
The retail sector has remained resilient overall, although some parts have performed much better than others. Clothing and footwear and cafes, restaurants and takeaways have struggled, while household goods, department stores, food and other retailing have performed strongly, a pattern of consumption reflecting consumers staying home.
In a somewhat surprising turn of events, retail has gone from the weakest performer in the NAB Monthly Business Survey last year to the strongest in August (followed by wholesale).
However, the Australian economy remains in a bad shape, with Q2 National Accounts recording a bigger than expected drop in GDP. While our latest forecasts point to a slight positive in Q3, Q4 could well go backwards again. We now see unemployment reaching 10% in early 2021. With unemployment so high and government support set to fall, consumer spending will be increasingly constrained, particularly on the types of discretionary goods that have propelled the sector this year.
For more information, please see the NAB Cashless Retail Sales Index August 2020
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