Daily Commentary BY THE CURVE TEAM –

Retail Sales Dip

22nd of July, 2021

Lockdowns dragged retail sales down with worse still to come.

Preliminary retail sales for June showed a fall of 1.8% in sales. Over the period, namely Victoria and NSW were partially in lockdown.

Victoria fell 3.5% and NSW fell 2%. This does not bode well for July, which has seen NSW in lockdown for the entire moth and now Victoria and South Australia are currently in lockdown.

Even despite this dip, sales remain well above pre covid levels and 2.9% higher than this time last year. As services were restricted during covid and incomes rose off the back of government stimulus payments, retail sales have jumped on pre covid levels and sustained the high levels.

Whether this is sustained over the medium to long term or reverts back is yet to be seen.

The lack of economic activity from lockdowns is already beginning to effect ADIs. Appetite for funds is very low as consumers reduce their spending.

Lending is also likely to have declined while there are lockdowns, meaning there are less loans to fund. While lockdowns are pervasive across the country, it is unlikely that appetite to raise funds from ADIs will be high, which should keep downward pressure on rates.

Josh Stewart

Associate - Money Markets