Daily Commentary BY THE CURVE TEAM –

Retail Sales Remain Strong

7th of September, 2020

As expected, retail sales remain a bright spot in an otherwise laggard economy.

Retail sales for July were up 3.2% from a month earlier. This leaves retail sales up 12% on last year.

Since April, sales have grown every month. Despite the hit to employment since March, government stimulus and wage subsidies has allowed disposable incomes to hold up. This has enabled people to increase their retail spending as lockdowns have been unwound. Spending on cafes and restaurants was up 4.9%, clothing up 7.1% and household goods up more than 4%.

Victoria was the only state to record a fall in sales for the month, as stage 3 lockdowns were imposed during the sample period. Sales fell 2.1%, which was propped up by stockpiling.

It is unlikely Victoria will see noteworthy increases in their sales from August to October, as stage 4 lockdowns are currently in place and Premier Andrews announcing a very conservative benchmark for unwinding lockdowns. Andrews will aim to have new daily cases under 5 before considering loosening the current measures, which will not bode well for retail spending.

Overseas the US employment numbers beat expectations, with unemployment declining to 8.4% from 10.2%. However, job gains in the private sector underdelivered and the data was from a more volatile household survey, so it is likely the unemployment number overestimates the improvement in the labour market.

This week Australia will get payrolls data for September and the NAB business survey will be released.

Josh Stewart

Client Relationship Manager