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Retail sales slump as coronavirus 'torpedo' hits economy, budget
By Shane Wright
The scale of Australia's first recession in 30 years is becoming clear, with retail sales collapsing in April and Prime Minister Scott Morrison likening the coronavirus to a torpedo hitting the economy and federal budget.
Just a day after the March quarter national accounts showed the economy contracting by 0.3 per cent, the first month of sales data for the June quarter showed shoppers disappearing from malls and high streets.
Total sales dropped 17.7 per cent in April after rising 8.5 per cent in March. Victoria was hardest hit, with sales tumbling 21.1 per cent. They dropped by 17.5 per cent in NSW, 15.7 per cent in Queensland and 16.8 per cent in Western Australia.
Pandemic-related closures and social distancing resulted in sales of clothing and footwear slumping almost 54 per cent in the month. Sales nationally were just $771 million in April, the lowest monthly result since May 1995.
After hoarding key staples through March, shoppers slashed their purchases of goods such as canned meat and seafood (down 56 per cent), pasta and rice (down 52.4 per cent) and toilet paper (down 43.5 per cent) the following month.
Despite these drops, sales of some goods were well ahead of normal, suggesting further falls in May. Purchases of flour, while down 34 per cent in April, were still almost 50 per cent up on the same time last year.
The March-quarter national accounts were hit hard by the largest fall in household consumption since 1986. The April retail data points to an even bigger drop, especially around discretionary goods and services.
Separate figures from the Australian Bureau of Statistics showed the nation's trade surplus in April fell slightly to $8.8 billion, but also revealed how some measures to stop the spread of the coronavirus hit the economy.
Overseas travel by Australians dropped to just $49 million in April, from $5.1 billion in December. Incoming tourism held up better, but was still down by 43 per cent, or more than $2.5 billion, since the end of 2019. It is forecast to edge down further through May.
Announcing elements of the government's $688 million support package for the housing sector on Thursday, Mr Morrison said even though Australia was performing better than most countries, it was still heartbreaking to see the nation in recession.
"To see COVID-19 hit it like a torpedo is absolutely devastating. But what you do is you respond and you pull together and that's what the country is doing," he said.
The Prime Minister warned that even though the economy would improve, it would struggle for some time.
"The economy is not going to be as big as it was when this started, even with everything opening up, because until we've got a vaccine, we are still going to be operating at some level of restriction," he said.
Shadow treasurer Jim Chalmers said the government's focus on how other nations were performing ignored the plight of many Australians now struggling with high unemployment.
"That kind of boast, that it's better than it is in America as America tears itself apart in lots of ways ... doesn't pay your rent or your mortgage, does it?" he said.
"That doesn’t put food on your table, or school shoes on your kids. We need and expect much better from this government."