Growth, inflation and labour market all easing
Retail trends continue to point to the COVID-induced consumer boom having largely run its course.
A month ago, life in Australia was very close to pre-pandemic “normal”, and while this illusion has been shattered in Victoria, retail trends continue to point to the COVID-induced consumer boom having largely run its course. Rather the drivers of growth are turning to dwelling and plant and equipment investment and manufacturing – probably reflecting the turnaround in dwelling construction.
While the Australian economy continues to outperform, consumer spending is increasingly taking a back seat as a driver of growth. The NAB Monthly Business Survey again showed business conditions at a record high in May, with continued strength in the retail sector. That said, retail and wholesale were relatively less confident than other sectors in the survey.
While good employment news continues, this is yet to translate to higher wage growth, which is coming off record lows set in 2020. Without sustained wage growth, sustainable ongoing growth in the retail sector is likely to remain elusive.
For more information, please see the NAB Cashless Retail Sales Index May 2021
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