Snap pandemic lockdowns enacted in Victoria and Western Australia in February contributed to Australian retail sales declining by 0.8% in the month. Turnover remains elevated on its pre-pandemic level, up 9.1% on a year earlier, with online (52.5%yr) and household goods (19.4%yr) seeing the strongest increases over the period, benefitting from increased in-home spending as a result of the lockdowns.
Retail Sales — February | By the numbers
- Retail turnover (nominal) declined by 0.8% in February to $30.3bn, less severe than the preliminary and market estimate of -1.1%. Turnover in January rose 0.3%; the pace revised from 0.5% in today's report.
- Annual growth in turnover slowed to a 9.1% pace from 10.6%.
Retail Sales — February | The details
National retail sales fell by 0.8% in February on the back of sharp declines in Victoria (-3.0%) and Western Australia (-5.4%) after both states were placed into snap lockdowns during the month. Excluding these two states, retail sales advanced by 0.9% across the rest of the nation indicating underlying demand is still fairly robust. Adding further weight to this view, discretionary sales (excluding basic food) lifted 0.8% in the month. Turnover was 9.1% above its pre-pandemic level from a year earlier but will slow sharply next month as pandemic-related base effects start to kick in, with the stockpiling-driven 8.1% surge from last March in preparation for the national lockdown rolling into the annual calculation.
The effects of February's snap lockdowns in Victoria and Western Australia were more evident in the national figure than in the underlying category detail. In spite of sizeable declines in discretionary spending in Victoria (-4.4%) and Western Australia (-4.9%), it still lifted by 0.8% nationally in February. Within this, department stores (2.2%), clothing and footwear (1.6%), cafes and restaurants (1.1%), and household goods (0.7%) all advanced. Of all the major categories, annual growth has been strongest in household goods (19.4%), boosted by in-home spending associated with the lockdowns. Spending at cafes and restaurants (-2.2%) is the only category yet to return to its pre-pandemic level having been on the wrong side of lockdowns and capacity restrictions.
Meanwhile, online sales pulled back by 2.2% in the month, with the annual pace trending down to 52.5% from its August peak of 79.0%. The surge up in online sales was accelerated by lockdowns and now the reopening phase has led to the pace slowing.
As the chart below shows, retail sales across the states in February was generally elevated relative to pre-pandemic levels. Annual growth was running at around 10% in New South Wales, Western Australia and Tasmania and was a touch slower in South Australia (9.1%). Queensland was outperforming at 12.1% but could well slip back in March after a snap lockdown in Brisbane. Victoria was slowest at 3.6%yr, though sales have been volatile over recent months as they have moderated since surging on its reopening (+22% in November) with an additional hit coming from its subsequent 5-day lockdown in February.
Retail Sales — February | Insights
Snap lockdowns in Victoria and Western Australia weighed on national retail sales in February (-0.8%), though looking through these effects which will soon be reversed, the underlying details remained broadly consistent with robust household spending.