Surprise spending in April as households splurge in stores
Your favorite retailers are still basking in the post-pandemic glow as cash flow households continue to spend at higher than usual levels.
Retail sales rose 1.1% to $ 31.04 billion in April, according to preliminary results from the Australian Bureau of Statistics data released Friday revealed, after increasing 1.3% in March.
The result surprised economists, who expected a 0.5% increase.
Sales were up 25.1 percent from a year ago, when most countries finished panic buying and moving into lockdowns.
But Australian retailers are way ahead of what they would be if COVID-19 had not happened, with cash flow households shopping locally instead of taking overseas vacations due to border closure international.
In other words, Fortress Australia is up to the task – at least for our retailers.
“Retail performed well in April, spending at its second highest level on record,” said Callam Pickering, APAC economist.
“Spending has held up impressively despite the end of JobKeeper towards the end of March and the short-term blockage [WA]. “
Sarah Hunter, chief economist at BIS Oxford, said Australians generally spend more money abroad than foreign visitors spend here.
“Normally the retail business wouldn’t have that support because people could travel,†said Dr Hunter. The new daily.
“[The border closure] does provide additional support that would not normally be provided to businesses. “
Preliminary data does not include a detailed expenditure breakdown, but Ben James, ABS director of quarterly economy-wide surveys, said food retailing was increasing industry by industry with a 1.5% increase.
“All industries except department stores increased, with similar increases in cafes, restaurants and take-out food services, household goods retail and other retail businesses.” James said in a statement on Friday.
Rising household goods sales are good news for Harvey Norman and JB Hi-Fi, after spending slumped 0.07% in March.
Weak department stores could be seen as a sign that the glow is emerging from the post-pandemic spending madness, but Myer and David Jones saw a massive 8.4% increase in March.
‘Strong’ retail sales
Kristina Clifton, a senior economist at the Commonwealth Bank, said April retail spending was “strong”, particularly in New South Wales and Victoria, where sales rose 2% on the month – offsetting a drop of 1.5% in WA.
“The NSW government food and discovery vouchers appear to be working, with restaurant meals in New South Wales increasing more than the national average,†Clifton said in a research note Friday.
“Dining out has been the slowest of the major retail categories to recover from the pandemic, but after the April rally it is now above what it was before COVID.”
What is fueling the spending frenzy?
What drives all these expenses? Well, it’s a pretty straightforward story, actually.
Interest rates are at historically low levels, the government pumped billions of dollars into household balance sheets during the pandemic, and perhaps more importantly, what else are people going to spend on?
International borders are closed, which means vacation abroad is over, unless you head to New Zealand, while many service companies are just getting back on their feet after the pandemic.
That leaves the local mall, at least for the 90% of retail spending that still occurs in physical stores.
Economists have previously estimated that closing the international border is a net benefit to Australia’s economy, resulting in additional spending of over US $ 40 billion each year.
How long will it last? It’s a little harder to say, but the international border will likely be closed until 2022, according to the prime minister.