Retail sales recovered in March, but while the 1.4% rise was slightly better than expected and more than made up for the 0.8% slide in February (originally reported as a 1.1% drop), the longer-term trend remains cloudy.
The preliminary retail sales report from the Australian Bureau of Statistics (ABS) showed the rise was led by Victoria where sales rose 4% and WA where they rose 5.5% – those gains reflected a recovery after snap lockdowns in both states depressed sales in February.
Turnover rose 2.3% when compared to March 2020, a sharp slowdown from the 9.1% annual gain in February.
That was due to March 2020 being the first month where the surge in retail sales ahead of the pandemic driven lockdowns boosted retailing.
Retail sales this month though will show a large annual rate when released in a month’s time after they fell more than 17% in March 2020.
That saw sales surge 8.2% as consumers stacked up on toilet paper, dried foods like pasta and rice and liquor
ABS Director of Quarterly Economy Wide Surveys, Ben James said in Wednesday’s release that said that “Victoria and Western Australia led the rises, after COVID-19 lockdowns impacted retail sales in February 2021.
Queensland saw a small fall, with Greater Brisbane impacted by lockdown restrictions from 29 March.”
Cafes, restaurants and takeaway food services (6%) led the rises by industry, driven by increases in Victoria and Western Australia. Clothing, footwear and personal accessory retailing, and department stores also saw rises led by these two states. Nationally, food retailing saw a fall of 1%.
AMP chief economist Shane Oliver says despite the slower annual growth rate, the level of retail sales “remains strong and well above its long-term trend.”
“Thanks partly to snap lockdowns since late December, March quarter retail sales fell -0.1% from the December quarter which will likely mean a 0.8% or so fall in real terms for the last quarter (assuming a 0.7% rise in prices).
“This may also partly reflect a rotation in spending back to consumer services so may not be as negative for quarterly consumer spending as it suggests,” Dr Oliver said in a note yesterday.
Next week will give us a good idea of how the sector’s major players went with Coles and Woolies due to release third quarter sales updates.
