Australia’s retail sales slump in August, but relief in sight
- Retail sales in August -1.7% m / m vs forecast -2.5%
- Closures are expected to ease from mid-October
- Pent-up demand, high savings to boost sales in Q4
SYDNEY, Sept.28 (Reuters) – Australian retail sales plunged for a third straight month in August as half of the population was trapped in coronavirus lockdowns, though a reopening is in sight as vaccinations roll off rush to global levels.
Figures from the Australian Bureau of Statistics showed on Tuesday that retail sales fell 1.7% in August to A $ 29.3 billion ($ 21.27 billion). This follows a 2.7% drop in July, but exceeded market expectations of a 2.5% drop.
The AU $ 360 billion retail sector accounts for around 18% of gross domestic product and further weakness is expected this month with Sydney, Melbourne and Canberra all locked down.
While the economy as a whole is sure to contract sharply this quarter, relief is in sight with New South Wales just weeks away from easing restrictions as people flock to get bitten.
After an excruciatingly slow start, nearly 86% of the adult population of NSW have now received a first injection and 60% have received a double dose. By the end of October, the state is expected to overtake world leader Portugal, which has 84% of them fully vaccinated.
For Australia as a whole, 77% have received their first dose and the fully vaccinated share will soon exceed that of the United States.
“Upon reopening, spending will be driven by pent-up demand after months of containment and accumulated savings,” ABC economist Stephen Wu said.
“But we do expect some bumps along the way, as some consumers will initially be reluctant to catch the virus or come into contact with the virus and be forced into isolation.”
Yet the pandemic has also massively accelerated the adoption of online shopping by both consumers and retailers. Online food sales have doubled from pre-pandemic levels, and even gourmet restaurants have stepped into the game, selling take-out and put-together gourmet meal kits at home.
It saved the lives of struggling department stores with annual sales booming over 50%.
NAB analysts estimate Australians spent nearly A $ 51 billion on online retailing in the year through August, an annual increase of around 30% and double the levels seen before the pandemic.
The windfall, however, is stretching supply chains and driving up costs. Australia Post recently touted its busiest day in history and warned customers to shop early for Christmas.
($ 1 = AU $ 1.3778)
Reporting by Wayne Cole; Editing by Tom Hogue and Kim Coghill
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