Cashless Retail Sales Index: July 2021
NABs data mapping points to retail sales falling substantially in July.
- Our data mapping points to retail sales falling substantially in July. We see the official ABS measure falling 3.3% on a month-on-month basis. Retail sales fell 1.8% in June – we forecast a 1.1% drop at the time, since revised to -1.5%.
- Since May we have seen lockdowns in all states and territories except Tasmania and the ACT. New South Wales presents the largest concern at present, with cases continuing to increase despite an almost two-month long lockdown. This is clearly a drag on retail and in particular hospitality and unlikely to improve in the short term.
- It has been our view for some time that consumption would come under pressure in 2021 and cease to be the driver of growth that we saw in H2 2020. However, the extent of lockdown activity and hit to retail sales has gone well beyond our expectations earlier in the year. Many challenges await in coming months.
NAB Chief Economist, Alan Oster commented
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