- ABS retail trade figures show the month of March recorded the biggest rise on record, as Australians stocked up on essentials.
- While food, alcohol, hardware, household good, electronics all jumped, discretionary spending on things like footwear plummeted.
- With April expected to really have felt the bite of government restrictions, economists now expect next month to break another record — the biggest monthly fall.
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Australian retailers better have enjoyed themselves in March because, unfortunately, it’s not going to get any better for a while.
With panic-buying driving sales of essential items as restrictions took place, new ABS data released on Wednesday shows it was one for the history books, with sales jumping 8.5%.
“This was the largest rise in retail sales in history, even more than the 8.1% surge in retail sales before the GST was introduced in July 2000, driven by panic buying of food and alcohol and a record increase in household goods items,” AMP Capital senior economist Diana Mousina said in a note issued to Business Insider Australia.
Take supermarket spending, which grew by 23% and was only blitzed by a 30% jump in alcohol spending as the country reached for a stiff drink. Interestingly, the higher turnover wasn’t a result of higher volumes of purchases but higher prices. The drought and higher demand put a floor under food prices, for example.
In fact, the bushfires – remember those? – actually cut sales volumes in New South Wales and the ACT.
Meanwhile, a mass transition from the office block to the home office saw household goods and electronics jump 9.1% and 11.3% respectively. If you’ve been to a Bunnings recently, you’d hardly be shocked to know we spent 17.4% more on hardware, building and gardening supplies. As Mousina notes, “people finally got time to work on their garden like my dad”.
But while he and countless others toil away in backyards around the country, Australians confined to homes and perplexed by the course of the economy aren’t spending on much else.
“The volume data also give an indication of how substantial the contraction in discretionary spending has been, with the clothing and footwear category particularly hard hit – 12.1% on the quarter,” BIS Oxford Economics chief economist Sarah Hunter said.
Discretionary spending, however, fell across the board, and with the assumption that pantries are well and truly stocked to the rafters, it’s downhill from here for spending of all stripes.
“It’s expected that slower growth in food spending over April will not be enough to offset the collapse in eating out, recreation and clothing retailing as a lot of these businesses were forced to close,” Mousina said.
“Credit card spending data from the major banks shows that overall spending is still down around 20% from a year ago. We expect the April retail sales figures to show the largest fall on record but there should be some improvement in May as consumers are out and about more and as some retail stores are slowly opening up again,” she added.
Even as the federal government approaches its Friday review of the current restrictions, we’re a long way, Hunter reminds us, from business as usual.
“It will be quite some time before a full recovery. The majority of the sector will not be able to operate as normal for many months, confidence is still well below historical averages, and some households will increasingly have to grapple with weaker incomes as a result of job losses,” she said.
It’s appropriate that with the coronavirus shutdown turning the economy upside down, even a ray of sunlight in March is telling of a bigger storm to come.