Daily Commentary BY THE CURVE TEAM –

Strong Retail Sales Continue

24th of August, 2020

Preliminary data on retail sales for July show the increase in consumption from a retail perspective has continued.

Retail sales have been the saving grace in the economy during Covid-19. Besides a steep fall in consumption in April when the country was in lockdown, retail sales have been very strong.

In July, sales were up 3.3% on the month prior. Only in Victoria, where the state was in a stage 3 lockdown did sales decrease by 2%. Otherwise a continued pick up in eating out, clothing and especially household goods drove the gains.

It leaves retail sales 12.2% higher than a year ago and 10.7% higher than February, before the pandemic. These levels are testament to the large income support measures provided by the government namely in the form of JobKeeper, JobSeeker and super withdrawals.

The lack of other discretionary spending options such as travel and many services is also helping to boost the retail sector.

Amendments to JobSeeker and JobKeeper payments as of October could pose a risk to retail sales, as will the continued threat of lockdown measures if the virus spreads. Although on the virus front, case numbers continue to decline in Victoria and for the most part are contained elsewhere in Australia.

With no key data releases out this week, case numbers of Covid-19 will be the key data point that is followed, given its implications on spending and general activity.

Josh Stewart

Client Relationship Manager