The collapse in retail spending for June is more evidence Australia’s GDP will contract in the September quarter, economists say, as industry groups say there’s no guarantee of a spending snap-back once harsh lockdown measures are lifted.
The Australian Bureau of Statistics on Wednesday released its detailed June retail turnover data, confirming preliminary estimates of a 1.8% decline over the month to $30.59 billion.
Clothing, footwear, and personal accessories took the largest tumble, recording a fall of 9.5% over the month, followed by department store turnover, which sunk by 7%.
Cafe and restaurants also dipped by 6%, with the main outlier being food retail, which rose 1.5% from May levels.
The data reflects the impact of widespread COVID-19 lockdowns in major centres across the country, which continued to constrain movement and spending a year and a half after the pandemic first hit Australia.
Victoria recorded the sharpest declines in spending, falling 4% over the month. That downturn is linked to the state’s fourth lockdown, which started in late May and stretched through to June 8.
New South Wales recorded the second most precipitous fall, down 2%, largely due to the lockdown measures which first impacted local government areas in south-west Sydney before spreading to the entire Greater Sydney region on June 26.
Those retail sale figures are a grim portent, said Sarah Hunter, Chief Australia Economist for BIS Oxford Economics.
“As the data largely predate impact of the current restrictions in NSW and Queensland, and the snap lockdowns and ongoing restrictions in South Australia and Victoria, the near term outlook is challenging,” she said.
“Retail turnover in July is set to record a sharp drop, with only a partial recovery likely for August.”
Combined with other limitations caused by the Greater Sydney lockdown, Hunter said the national economy is slated to shrink through the September quarter.
“Together with a pronounced fall in household spending on other services (travel, personal care etc) and the pause in construction in NSW, GDP is likely to contract by around 2% in the September quarter,” she said.
Fears for an extended spending downturn were echoed by Australian Retailers Association CEO Paul Zahra, who said the June figures are “just the tip of the iceberg”, given the most recent Victorian lockdown, plus July restrictions in Western Australia, South Australia, the Northern Territory, and more recently in south-east Queensland.
In June, the Reserve Bank of Australia Assistant Governor Luci Ellis said, “timely data on spending suggest that the snap-back after the shorter lockdowns imposed in parts of Australia this year has been almost immediate.”
Zahra today indicated he had little faith in the same uptick occurring again, unless even more financial supports are provided to struggling firms.
“Without adequate support after lockdowns are lifted, it is unlikely that businesses will snap back as they have previously and we fear the worst is still to come,” Zahra said.
Despite the June downturn, the latest ABS data suggests spending grew 0.8% over the quarter, and was 2.9% higher than the same period in 2020, when Australia experienced its first tranche of hardcore lockdowns.