Daily Commentary BY THE CURVE TEAM –

Retail Spending Continues

25th of May, 2021

April’s retail spending points to a trend in consumer spending.

Preliminary retail sales for April were up 1.1% in April. This follows a 1.3% rise over March.

With the latest capital expenditure data to be released Thursday, the retail sales provide another indicator of how sustainable the economic recovery is. Following covid lockdowns and restrictions on spending and travel, consumers ramped up their retail spending.

It was uncertain whether this would be temporary or sustained. This year high levels of spending have been sustained, even as the domestic (not international) economy has opened up.

This bodes well for economic activity, as consumption makes up the bulk of GDP. So sustained levels will have ongoing positive ramifications for the economy.

Also of interest for consumption will be services spending. This remained down from pre covid levels in Q1, as the economy was still partially in lockdown.

Services spending is considered more sustainable, so if this simultaneously rises while retail spending remains high then GDP should rise strongly.

Josh Stewart

Associate - Money Markets