Australians withdrawing funds from their superannuation accounts have helped drive a national shopping spree during the pandemic.
Retail sales in Australia rose a solid 2.4 per cent in June, as people flocked to reopened cafes and restaurants and spent more on clothing in the first full month of trade since the lockdowns ended.
Turnover for the month rose to $29.7 billion, and was up 8.2 per cent from a year ago, according to preliminary figures released by the Australian Bureau of Statistics on Wednesday.
The overall rise in June comes on top of a huge 16.9 per cent jump in May, which followed a record 17.7 per cent fall in April.
“Households seem to be transitioning to a ‘new normal’ of spending, where elevated retail spending replaces expenditure on travel and entertainment,” ANZ economists Adelaide Timbrell and Catherine Birch wrote in a research note.
Cafe, restaurant and takeaway food service spending jumped more than 20 per cent for the second consecutive month, but was still 17 per cent below the level in June 2019.
Clothing, footwear and personal accessory spending gained 19 per cent, but remained six per cent lower from a year ago.
Food retailing rose 0.9 per cent, as a rise in supermarkets and grocery stores spending was offset by a fall in liquor retailing, the ABS said.
There was some evidence of stockpiling at the very end of June, particularly in Victoria, which has reimposed lockdowns in parts of the state.
St George Banking Group chief economist Besa Deda says the figures are encouraging, as retail spending represents a large part of economic growth.
But she cautioned that “the recovery that is underway is fragile, it is vulnerable to further shocks, and that’s related to consumer confidence.”
There might be further falls in July as pent-up demand subsides, but overall household good spending was well above pre-COVID levels, Sarah Hunter, chief economist for BIS Oxford Economics, said.
Household goods retailing fell in June but remains 23 per cent above June 2019 levels, the ABS data showed.
This confirms that consumers are substituting spending on services – particularly travel – towards retail goods.
“Looking ahead, overall spending is likely to remain elevated in the very near term, with households likely to continue to substitute retail goods for services (conversely, spending in cafes and restaurants will remain subdued),” Ms Hunter wrote in research note.
However businesses could face another shock as the cash splash dries up, with the winding back of the JobKeeper and JobSeeker schemes expected to weigh on household spending from October, she added.
Job losses recently materialising in the construction and professional services sectors are also likely to be a drag on retail spending, Ms Hunter said.