Retail sales surged again July, driven by sales in household goods – and despite tougher restrictions in Victoria

Retail sales continued a stronger than expected recovery in July, up 3.3 per cent despite stricter COVID-19 lockdowns in Victoria that dragged sales in that state down.

Preliminary retail data from the Australian Bureau of Statistics showed that sales fell 2 per cent in Victoria in July as stage three restrictions were introduced, but it was the only state to record a monthly fall.

The overall increase in sales across the country was the sixth-biggest monthly rise since records were first kept in 1982. Turnover rose 12.2 per cent in July 2020 compared with July 2019, in seasonally adjusted terms.

The jump was driven by household goods retailing, which was 30 per cent above the levels of July 2019, with sales of furniture, white goods and electrical items remaining high.

This bodes well for a further increase in earnings for retailers such as furniture retailer Nick Scali, which raised its dividends last week following surprisingly strong earnings.

Online retailers of household goods Temple & Webster and Kogan also reported booming sales in the June quarter.

The figures show that turnover continued to increase in clothing, footwear and personal accessory retailing, and cafes, restaurants and takeaway food services. Retail sales bounced 16.9 per cent in May after having fallen 17.7 per cent in April. They again climbed 2.7 per cent in June.

The continued rise in sales reflects the billions of dollars of government stimulus working their way into the economy.

So far the government has spent $41.8 billion in JobKeeper payments, and has also disbursed $9.2 billion worth of $750 special payments to welfare recipients and another $8.5 billion in supplement payments to people on JobSeeker.

Australian Retailers Association chief executive Paul Zahra said the July figures were a good sign of the recovery.

“There is a lot to be positive about in the July results,” Mr Zahra said, “Although we are cognisant of the vastly different resuylts in areas such as tourism areas.”

“We believe the results are fuelled by the government’s stimulus in JobKeeper and JobSeeker as well as the superannuation withdrawals.”

“We also think that because people are still limited to what they can do and where they can spend. They can’t go overseas so I think they are putting the money back into the domestic economy,” Mr Zahra said.

The preliminary sales surprised economists. NAB had forecast a modest 0.5 per cent rise for July.

“This forecast reflects the level of retail sales being 7.2 per cent higher than its pre-pandemic February level. It also reflects the renewed Victorian lockdowns, where for most of July Melbourne and Mitchell shire were in stage three lockdown,” NAB said.

Australian Bureau of Statistics director of quarterly economy Wide Surveys Ben James said the rise across the rest of the country outside Victoria was driven by continued strength in household goods retailing, and the recovery in cafes, restaurants and takeaway food services, and clothing, footwear and personal accessory retailing.

This story originally appeared in the Australian Financial Review. Read the original story here.