Growth, inflation and labour market all easing
Recent lockdowns look to have dented retail spending in areas hard-hit in 2020, notably hospitality and clothing and footwear.
Two months ago, life in Australia was very close to pre-pandemic “normal”, but this illusion has been shattered nation-wide, with recent lockdowns in every state and territory bar South Australia, Tasmania and the ACT. Indeed. Sydney’s lockdown is likely to continue beyond its planned expiry at the end of this week.
These lockdowns look to have dented retail spending in areas hard-hit in 2020, notably hospitality and clothing and footwear. We see the ABS measure for these sectors down 9.1% and 15.2% m/m respectively in June. But even setting these lockdowns aside, underlying retail trends continue to point to the 2020 COVID-induced retail boom being basically over.
While the Australian economy continues to perform well, consumer spending is increasingly taking a back seat as a driver of growth. The June NAB Monthly Business Survey showed a hit to business confidence, particularly in New South Wales and Queensland, as well as a decline in business conditions in Victoria (which was emerging from lockdown during the survey period). That said, confidence remains around twice its long run average.
For more information, please see the NAB Cashless Retail Sales Index June 2021
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