Retail Sales — June | By the numbers
- Nominal retail turnover increased by 2.7% in June to $29.760bn, slightly ahead of the 2.4% rise expected, after May's post-shutdown record surge of 16.9%. In annual terms, turnover growth firmed from 5.8% to 8.5%.
- Retail volumes (nominal sales adjusted for inflation) contracted by more than expected with a 3.4% fall in Q2 (consensus was for a 3.0% fall), flipping the annual pace from 1.1% to its weakest on record at -2.4%. Retail prices continued to advance strongly rising by 1.2% after a 1.9% lift in Q1 on the back of strong demand for essentials and household goods in preparation for the shutdown.
Retail Sales — June | The details
After retail sales lifted at a record pace in May as the Australian economy started to reopen, spending advanced by a further 2.7% in June to $29.76bn. At that level, retail sales stand some 7.2% above their pre-pandemic level from February, with the Federal Government's income support measures, the early release scheme from superannuation accounts, and pent-up demand the key factors helping to drive spending post-shutdown.
After retail sales lifted at a record pace in May as the Australian economy started to reopen, spending advanced by a further 2.7% in June to $29.76bn. At that level, retail sales stand some 7.2% above their pre-pandemic level from February, with the Federal Government's income support measures, the early release scheme from superannuation accounts, and pent-up demand the key factors helping to drive spending post-shutdown.
The chart, below, shows the breakdown in nominal spending growth for the month, quarter and year across the major categories. The impending shutdown drove very strong demand in basic food and household goods in March and spending in these categories is still well above their respective pre-pandemic levels, with food up by 10.9% and household goods 23% higher. Spending on clothing and footwear (-0.8%) and in department stores (-1.5%) is still marginally down on where it was in February. Cafes and restaurants saw a snapback in turnover in May (30.4%) and June (27.9%) as they reopened, but the level of spending is still way down (-17.0%) on pre-pandemic times, highlighting the impact of reduced capacity due to ongoing social distancing measures and effects on confidence.
On volumes, the 3.4% contraction in Q2 was its second steepest pullback in percentage terms in a single quarter on record, surpassed only by the GST-induced decline back in 2000 (-3.7%). Food contracted (-1.6%) after a record March quarter due to stockpiling by households ahead of the shutdown. Household goods soared by 14.6%, possibly because working from home arrangements were becoming more long term and other areas of spending, such as on travel and recreation, were no longer available driving a shift in consumption patterns. The impact of the shutdown, social distancing measures and precautionary behaviour had enormous impacts on clothing and footwear retailers (-22.0%) and on cafes and restaurants (-29.1%) in the June quarter following on from Q1's weakness as the pandemic emerged.
Retail prices overall advanced by 1.2% in the June quarter, driven by a 1.7% rise in food (6.6%yr) and a lift of 1.7% for household goods (1.5%yr). Last week's CPI data also reported some strong rises in food prices in response to the surge in demand driven by household stockpiling and also in furniture and appliances in relation to the household goods category to facilitate working from home, but as noted earlier this could also be reflective of a shift in underlying consumption patterns.
Retail Sales — June | Insights
