Below trend growth to continue
Our data mapping suggests that the ABS retail trade measure will fall 5.3% in April.
This month we continue our podcast series to accompany the NAB Cashless Retail Sales Index. It’s a short, 10 minute podcast, designed to give you a quick summary of the major drivers of the index this month. Listen now.
NAB Chief Economist, Alan Oster commented:
While March delivered a record retail trade result, this largely reflected one-off stockpiling at the peak of the coronavirus pandemic in Australia. The level of supermarket buying has already returned closer to normal, and crucially, the hole blown in discretionary retail is unlikely to be filled any time soon. With our latest economic forecasts pointing to unemployment at 11.7% by mid-year and remaining above pre-crisis levels over the next 18 months, consumers are unlikely to have a great deal of discretionary spending power.
This is reflected in the latest NAB Monthly Business Survey results, which show that business weakened further in April and are now well below the levels seen in the GFC. Conditions fell across almost all non-mining industries, including a sharp fall in wholesale which saw a surprise increase last month.
Restrictions still apply to some retail sub-sectors (notably cafes, restaurants and pubs), but rules are now being loosened elsewhere. Importantly, this does not mean that retail spending will necessarily return to pre-crisis levels. While government can directly limit the level of economic activity through lockdowns, it is unable to directly control the return to pre-coronavirus level of activity. More fiscal stimulus will probably be needed to put the Australian economy back closer to pre-crisis levels.
For more information, please see the NAB Cashless Retail Sales Index April 2020.
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