Victoria led Australia's retail recovery through the December quarter – but ABS data suggests things won't stay festive for long

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  • Victoria helped Australia’s total retail sales volume rise 2.5% in the December quarter, according to new ABS data.
  • Analysts say sales volume would have dipped without Victoria’s impact, and month-on-month retail turnover fell -4.1% in December.
  • “The shift back towards pre-COVID spending patterns will continue,” said Dr Sarah Hunter, chief economist for BIS Oxford Economics.
  • Visit Business Insider Australia’s homepage for more stories.

Victoria’s emergence from the worst of 2020’s coronavirus lockdowns drove a 2.5% growth in Australia’s retail sales volume over the December quarter, even as new COVID-19 scares over the Christmas period reined in discretionary spending.

New data from the Australian Bureau of Statistics (ABS) shows Victorian retail sales grew 12.8% over the December quarter, suggesting that some shoppers were happy to splash their cash when businesses opened back up.

But the national 2.5% growth figure trails off from the 6.5% rise in retail volume recorded over the September quarter.

Ben James, the ABS’ chief of economy-wide quarterly surveys, said that “without the Victorian rise, seasonally adjusted volumes would have fallen in the December quarter 2020.”

On a month-to-month basis, overall retail turnover fell -4.1% in December, led by a decline in department store trade, which dipped -12.5%. The volume of retail trade in household goods, clothing, and footwear also fell from elevated post-lockdown levels.

Cafe and restaurant trade was an exception to December’s rule, with a 3.2% rise in retail volume driven by relative, and temporary, normality during the festive season.

Some experts say the positive quarterly data conceals some uncomfortable truths about Australia’s retail trade recovery.

“Overall, when we consider November and December together, we must conclude that the retail year finished on a strong note,” said Callam Pickering, economist for jobs portal Indeed.

“However, we also must note that growth in the past few months primarily reflects the re-opening of the Victorian economy.”

The quadruple-whammy of JobKeeper’s demise, the end of the JobSeeker Coronavirus Supplement, low wage growth, and flagging population growth could see Australia’s retail sector struggle through 2021, Pickering said.

Dr Sarah Hunter, chief economist for BIS Oxford Economics echoed a similar sentiment, saying, “the shift back towards pre-COVID spending patterns will continue.”

Online sales, which spiked mid-year during the most severe industry shutdowns, are following the same trajectory.

Despite total online sales rising by 65.8% from March to December 2020, the final month of the year saw a -1.5% fall from November.

Not fantastic news for anyone banking on retail trade to continue shaking off coronavirus shutdowns.

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