Daily Commentary BY THE CURVE TEAM –

Victoria an Economic Upside

7th of December, 2020

Victoria’s reopening will continue to act as a tailwind for the economy.

Economic indicators have improved markedly since the Covid induced lows. This was due to the country unwinding lockdown rules, with the exception of Victoria.

Victoria re-opening will likely keep economic indicators improving. Retail sales for October was a prime example.

Sales were up 1.4% for October, with Victoria leading the gains with a 5.1% increase. The rest of the country rose a more modest 0.3%.

Retail sales have been a bright spot for the economy. Sales remain over 10% above pre Covid levels when excluding Victoria. Including Victoria, they are over 7% on pre Covid levels.

This pattern of Victoria having an outsized effect on data will be relevant for at least the next couple of months. Once the initial impact of Victoria reopening comes into effect, then we will get a clearer look at the state of the economy.

NAB’s Business survey data is released tomorrow and consumer confidence data on Thursday. Differentiating between Victoria and the rest of the country will be relevant for these.

Josh Stewart

Associate - Money Markets