Below trend growth to continue
NABs data mapping points to retail sales falling substantially in July.
Over the last two months, we have clearly seen a marked deterioration in Australia’s pandemic situation. While New South Wales has been the focus, lockdowns have hit most of the population for some of this time. The impact on the retail sector is clear: particularly in hospitality and clothing and footwear and to a lesser extent department stores and household goods.
These lockdowns have dented retail spending in areas hard-hit in 2020. We see the ABS measure of cafes, restaurants and takeaways down 13.9% m/m while clothing and footwear is forecast do drop 21.2% m/m.
The broader Australian economic outlook has been hit hard by the lockdowns. Q3 GDP will clearly be negative, with the focus now on how quickly the economy can rebound in Q4. While the current vaccination trajectory should get Australia to 80% of adults vaccinated before the end of the year, there is clearly a difficult period ahead. The July NAB Monthly Business Survey showed a sharp deterioration in business conditions and confidence, with the latter now back in negative territory.
For more information, please see the NAB Cashless Retail Sales Index July 2021
© National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686.