August retail sales fall 4.2pc as Vic lockdown bites

Vesna Poljak

Sep 23, 2020

AFR

Retail sales fell 4.2 per cent last month in seasonally adjusted terms as the shopping boom unleashed by COVID-19 finally runs out of steam and Melbourne households adjusted to the Andrews government’s stage four lockdown.

In year-on-year terms, August 2020 was up 6.9 per cent over August 2019.

Victorian retail sales fell 12.6 per cent in August, and excluding Victoria, the rest of Australia fell 1.5 per cent month-on-month.

The August result, which is based on preliminary data, follows a stronger-than-expected recovery in July, up 3.3 per cent (or 3.2 per cent for the final estimate). In year-on-year terms, July 2020 was up 12 per cent over July 2019.

The surprise 6.8 per cent unemployment rate recorded in August, fuelled by 111,000 new jobs, was better than economists expected. But economists have expressed unease the jobs growth was limited to self-employed or gig economy type work.

On the first Sunday in August, Melbourne was declared a state of disaster following COVID-19 outbreaks in aged care linked to 1,000 Victorian cases and uncontrolled community transmission which overwhelmed contact tracing efforts. That led to the imposition of the harshest restrictions yet on Melbourne residents, including an 8pm curfew and movement limited to 5 kilometres from home.

Melbourne’s restrictions have since been downgraded under the reopening strategy, but most of the city’s businesses won’t experience normal trading until late October. Wesfarmers-owned Bunnings stores in Melbourne still cannot accept walk-ins (under click-and-collect only arrangements) except for trade sales.

Since a rise of 16.9 per cent in May, retail sales have been a bright spot within the broader economy, reflecting changing spending preferences as households adjust to stay-at-home lifestyles and consumption is diverted from travel and recreation.

That has been echoed by the performance of discretionary retail stocks, which are reporting record orders mirrored by all-time high share prices.

There was no official consensus estimate for Wednesday’s figure, however, National Australia Bank was pencilling in a “small decline” and ANZ a 5 per cent drop.

A median estimate for a decline of 6.5 per cent is based on three forecasts tracked by Bloomberg and more accurately linked to the final August retail sales result provided by the Australian Bureau of Statistics, and due for release October 2.