Cashless Retail Sales Index: June 2021
Recent lockdowns look to have dented retail spending in areas hard-hit in 2020, notably hospitality and clothing and footwear.
- Our data mapping points to the ABS retail sales growth going into reverse in June, down 1.1% on a month-on-month basis. Last month, we forecast retail sales to stall (up 0.1%), but the ABS print surprised a little on the upside (0.4%) and our previous estimates are now revised.
- It has been our view for some months that consumption would come under pressure in 2021 and cease to be the driver of growth that we saw in H2 2020. We are also expecting to see a re-balancing away from goods towards services spending which would constrain retail sales. Our June data tells a similar story.
- Yet again, the pandemic has thrown a spanner in the works for many retailers. Since June we have seen lockdowns in Victoria, Sydney and surrounds, South-East Queensland, Townsville, Darwin, Alice Springs and Perth. Of these, only Sydney remains in lockdown – but not retail. It is likely that Sydney will experience a lockdown longer than three weeks, although retail settings are less restrictive than in other states.
NAB Chief Economist, Alan Oster commented
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