Retail trade falls a record 17.9pc in April

Matthew Cranston

May 20, 2020

AFR

Retail trade recorded its worst ever monthly fall collapsing 17.9 per cent in April in seasonally adjusted terms reflecting the darkest days of the COVID-19 shutdown.

The huge fall follows a record jump of 8.5 per cent in March following panic hoarding that could see March quarter GDP limp into positive territory.

The latest preliminary figures from the Australian Bureau of Statistics showed the monthly collapse was worse than the 10.6 per cent fall in July 2000 when the GST was introduced.

The fall in retail trade in April was driven by the food retailing industry, which fell 17.1 per cent or $2.4 billion in April, following a 24.1 per cent rise in March 2020.

Westpac and AMP Capital economists expected a fall of 15 per cent for the month of April. CBA expected an 11 per cent fall while NAB forecast a 7 per cent drop and ANZ a smaller 5 per cent decline.

Supermarket and grocery store scanner data collected by the ABS showed that monthly retail turnover for non-perishable goods fell 23.7 per cent after having risen 39 per cent during the March hoarding.

Turnover in perishable goods fell 15.3 per cent in April after having risen 21.6 per cent in March, while turnover of all other products plunged 24.5 per cent after a 30.5 per cent rise in March.

There were falls across all sectors including cafes, restaurants and takeaway food services as well as clothing, footwear and personal accessories retailing.

The ABS said businesses reported that regulations regarding social distancing measures limited their ability to trade as normal “for the entire month”.

While the preliminary figures show a collapse in spending, the CBA and ANZ credit and debit card published this week has shown a strong rebound in spending as COVID-19 restrictions start to ease.

BIS Oxford Economics chief economist Sarah Hunter noted that while there was a huge fall off in food retailing because people were no longer stockpiling, spending was still up on the same time last year.

“The unwinding of stockpiling spending meant that food retailing was the main driver of the decline, but spending is still up 5 per cent year on year, confirmation that the shift to working from home for almost half the population has resulted in a significant increase in spending in the supermarkets,” Dr Hunter said.

“Given the improving health outcomes, improving consumer confidence, and relaxation of restrictions, spending is likely to rebound in May,” she said, “And although the outlook is still uncertain, if this trend continues there is some near term upside risk to the Treasury and RBA projections for a 10 per cent fall in output in the first half of the year.”

The Reserve Bank has forecast that household consumption – one of the key indicators of the shape of economic recovery – will contract 15 per cent by June, while year-end consumption will be 9 per cent down.

A key part of this consumption forecast will rely on jobs and wages. The latest payroll data from the Australian Bureau of Statistics and Australian Taxation Office showed that in the seven weeks from mid-March to early May, about 950,000 jobs had been lost.