Australian retail sales printed at a stronger-than-expected 0.4% in May, outpacing the initial estimate that reported a 0.1% lift. The decline in sales in Victoria (-0.9%) associated with the state's recent lockdown was less severe than the 1.5% fall in the preliminary estimate. Retail spending remains elevated, up 7.7% over the year and 12.2% above its pre-pandemic level.
Retail Sales — May | By the numbers
- National retail turnover lifted by 0.4% in May to $31.16bn, coming in ahead of the preliminary estimate for a 0.1% rise. Turnover in April advanced by 1.1%.
- Annual turnover growth stepped down from 25.0% to 7.7%, as base effects from the early stages of the pandemic played through.
Retail Sales — May | The details
National retail sales lifted modestly in May (0.4%) around a lot of volatility associated with Victoria's recent snap lockdown. As the state went into lockdown, basic food sales surged, up 3.7%mth, and with non-essential retail shuttered, sales ex-food plunged by 3.8%mth. This was the driving factor behind the composition at the national level in which basic food showed strength (1.1%mth) as discretionary categories (sales ex-foods) softened (-0.1%mth). Household goods (-1.1%) and department stores (-0.7%) showed the most weakness nationally, driven by significant declines in these categories (-4.9% and -11.1% respectively) in Victoria. Given the composition of spending in May reflected a stay-at-home mix, the weakness in online retail sales (-4.8%mth) was somewhat surprising.
Looking through these effects, monthly turnover remained at a very elevated $31.16bn in May, up 7.7% on a year earlier when the national reopening was underway and 12.2% above pre-pandemic levels. Discretionary sales have driven the upswing, rising to be 14.5% higher than in May 2020 and a touch stronger (14.8%) against their pre-pandemic level.
Turning to the states where, as discussed, Victoria (-0.9%) was the major headwind to retail sales in May. However, this was overcome by strong gains in the month in Queensland (1.6%) and Western Australia (1.3%), as well as a more modest uplift in New South Wales (0.5%). As the chart (below) shows, spending in all states was comfortable above pre-pandemic levels in May. But it is worth highlighting that Victoria has underperformed the other states having been most affected by lockdowns.
Retail Sales — May | Insights
Today's report broadly showed the impact of Victoria's most recent lockdown weighing on national retail turnover in May. Spending in Victoria will rebound in June as the state reopened, but more volatility will hit the data next month with Sydney, Brisbane and Perth having gone into lockdowns after virus outbreaks.