Growth, inflation and labour market all easing
Our forecast points to a substantial rise in the ABS retail sales measure in February (+0.6% m/m), but there is very little to celebrate.
This month we continue our podcast series to accompany the NAB Cashless Retail Sales Index. In this short podcast, you’ll get a quick summary of the major drivers of the index this month. Listen now.
Our forecast points to a substantial rise in the ABS retail sales measure in February (+0.6% m/m), but there is very little to celebrate. Early February probably saw a brief respite between the bushfires crisis and the Coronavirus crisis, but the situation has changed now. Panic buying has now set in at supermarkets across Australia. While this will boost the headline retail sales figure in March, other retail sectors and consumption spend more generally in areas such as health, education, restaurants and other services – including airlines face massive challenges.
Last week, the Commonwealth government has announced a substantial fiscal stimulus of $18b (0.9% of GDP) to support the economy in the face of the Coronavirus outbreak. It is likely however, that further stimulus will be required to support the economy – possibly as early as later this week. The RBA will announce further policy measures tomorrow, suggesting that an inter-meeting cut is increasingly likely. The RBA has also announced it is ready to buy bonds to support the economy. While these measures should support demand, there will be ongoing supply issues as Coronavirus progressively shuts parts of the global supply chain. While China is now going back to work, it is not clear that other parts of the world will be able to keep supply online.
For more information, please see the NAB Cashless Retail Sales Index February 2020.
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