Australian retail sales rise 3.2% in July

The robust momentum in Australian retail sales coming out of the national shutdown continued into July, albeit moderated by the emerging impact of the return of virus concerns in Victoria. Retail turnover has risen by around 24% over the reopening period, reflecting a shift in spending patterns away from services into goods-related consumption. 

Retail Sales — July | By the numbers 

• Retail turnover (nominal) advanced by 3.2% in July to $30.71bn, just below the preliminary and market estimate of 3.3%. Turnover lifted by 2.7% in June. The pace of spending in annual terms increased to 12.0% from 8.5%.

Retail Sales — July | The details

The post-shutdown period continues to see retail spending lift, rising by a further 3.2% in the month of July after gains of 16.9% in May and 2.7% in June. This followed enormous volatility over March (8.5%) and April (-17.7%) as stockpiling occurred before the shutdown. All up, turnover stands 10.6% above its pre-pandemic level from February, with this week's national accounts reporting a sharp rise in household income in Q2 due to the Federal Government's fiscal support measures, while the early access to superannuation accounts and loan and rent deferrals have also been supportive.  

Gains in turnover were broad-based across the sector in July, with support continuing in household goods as clothing and footwear extended its rebound since the reopening lifting by a further 7.1% after surging by 129.2% in May and 20.5% in June. With interstate and overseas tourism unavailable due to border closures and precautionary behaviour and social distancing ongoing, spending has shifted away from services into goods, with online retail accounting for an elevated share of total turnover at 9.7% in July.   

  

Spending in all categories except for cafes, restaurants and takeaway food, which continues to be impacted by precautionary behaviour and social distancing that places limits on capacity within premises, is now above their pre-pandemic levels from back in February. 

Under the surface of the national result is the divergence between Victoria (-2.1%m/m), as shutdown orders were reinstated in Melbourne, and the other states (5.0%m/m on a combined basis). This will only get larger in August as a more stringent and geographically wider set of restrictions were enacted across the state of Victoria, while the reopenings in the other states progressed.  

Retail Sales — July | Insights

Today's retail sales data pre-dates the full impact of the reversal of Victoria's reopening that occurred in early August. A range of indicators on the consumer, such as the latest ABS household COVID-19 survey, have reported that the events in Victoria had spillover effects on confidence in the other states. Given this and considering that Victoria accounts for around 25% of retail sales nationally, a sharp pullback is likely to come through in August.