Consumer confidence; Retail trade
- What happened? Retail trade fell by 1.7 per cent in August to be down 0.7 per cent on a year ago. Consumer sentiment rose 0.4 per cent in the past week to a 10-week high of 103.7.
- Implications: Aussie consumers are looking ahead to the easing of lockdown restrictions. High saving/wealth, good job security and low interest rates all point to stronger retail spending this Christmas.
The consumer confidence and household spending data have implications for retailers, and other consumer-focussed businesses. Retail trade data is important for consumer-focussed companies.
What does it mean?
- Aussie consumers are looking forward to an end of lockdowns, with confidence lifting in line with vaccination rates. So-called freedom days lie ahead and it is reasonable to expect that Aussies will celebrate with a good dose of retail therapy. In the consumer sentiment survey, the response to the question on whether it is a good time to buy a major household item rose to the highest level in two months.
- We won’t get a clear sense of spending trends for a number of months. Obviously in lockdowns consumers are prevented from shopping at ‘bricks and mortar’ stores, online spending goes up instead, and people must make their MasterChef creations at home rather than going out to cafes and restaurants.
What do you need to know?
Retail trade – August
- Retail trade fell by 1.7 per cent in August to be down 0.7 per cent on a year ago. More detailed data will be available on October 5.
- Retail sales across states & territories in August: NSW (down 3.5 per cent); Victoria (down 3.0 per cent); Queensland (down 0.9 per cent); South Australia (up 6.6 per cent); Western Australia (up 2.8 per cent); Tasmania (down 1.1 per cent); Northern Territory (down 0.5 per cent); ACT (down 19.9 per cent).
- The ABS noted: “Another full month of lockdown has seen New South Wales fall 3.5 per cent to its lowest level since April 2020 when the pandemic first hit. After having restrictions eased in July, Victoria fell 3.0 per cent as the state was placed back into an ongoing lockdown on August 5. A snap lockdown on August 12 in the Australian Capital Territory heavily restricted non-essential retail leading to a 19.9 per cent fall, while a mid-month lockdown in South East Queensland drove a 0.9 per cent fall.
- With no lockdown restrictions in place for the month of August, retail turnover in South Australia rose 6.6 per cent, bouncing back strongly from a lockdown in late July. Western Australians continued to enjoy relatively few restrictions, with the state’s retail sales rising by 2.8 per cent.
- By industry, the extended physical store closures across the country continued to negatively impact retail trade in August with the largest falls in clothing, footwear and personal accessory retailing (-15.7 per cent), cafes, restaurants and takeaway food services (-7.0 per cent), department stores (-10.2 per cent), and household goods retailing (-2.3 per cent).
- Food retailing (2.1 per cent) saw the largest rise as coronavirus restrictions continue to limit mobility and keep households at home. Other retailing (0.8 per cent) also rose, in part due to additional online sales.”
CBA card spending data
- CBA has released the latest fortnightly report on card spending. https://www.commbankresearch.com.au/apex/researcharticleviewv2?id=a0N4y00000jh1Vh
- “Spending rose over the fortnight to the week ending 24 September, according to CBA’s high‑frequency card spending data. National spending is 9½ per cent higher than the corresponding week in 2019, up 1 percentage point from the 8½ per cent pace a fortnight ago. The pick up mostly reflects stay‑at‑home orders lifting in parts of regional Vic and regional NSW and the corresponding tick up in spending.”
Consumer sentiment – Week ended September 26
- The weekly ANZ-Roy Morgan consumer confidence rating rose by 0.4 per cent to a 10-week high of 103.7 (long-run average since 1990 is 112.5). Only two out of the five major sub-components rose last week.
What is the importance of the economic data?
- The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
- The Australian Bureau of Statistics’ (ABS) retail trade publication contains the most current readings on the performance of consumer spending. The ABS surveys 500 ‘larger businesses’ and 2,750 ‘smaller businesses’. Retail trade covers spending at a broad range of retail outlets but excludes both petrol and motor vehicle sales. A weak retail trade result may point to a slowing economy as well weighing on the share prices of listed retail stocks. But retail trade estimates can’t be assessed in isolation – it is important to look at the influences determining future trends in consumer spending, such as income, employment and confidence levels.