Wild quarter for retailers leaves biggest drop in spending since 2000

Retail trade over the three months to June suffered its biggest quarterly fall since the introduction of the GST in 2000.

Retail spending in June continued its recovery from a historic collapse in April, albeit at a more sedate pace. Picture: AAP

Retail trade over the three months to June suffered its biggest quarterly fall since the introduction of the GST in 2000, as the pandemic drove a massive collapse in spending in cafes and clothes shops, data from the Australian Bureau of Statistics shows.

The seasonally adjusted ABS figures reveal that after accounting for inflation, retail volumes fell by 3.4 per cent — just shy of the ­record 3.7 per cent plunge in the September quarter of 2000.

The figures point to an expected sharp decline in household consumption that will weigh heavily on GDP in the June quarter national accounts.

 

Victoria’s slower opening up of its economy led to a sharper 7 per cent decline in retail trade over the quarter, even before the second wave of new coronavirus infections hit the state.

Spending in cafes, restaurants and takeaway food outlets over the quarter slumped nearly 30 per cent, while turnover in clothing shops dropped by 22 per cent.

The quarterly retail trade figures conceal some wild monthly swings, particularly in the hospitality and clothing and footwear segments which staged a powerful rebound in May following an even larger collapse in April.

The fruits of the staged reopening of the economy in June were clear for the struggling hospitality sector, which enjoyed a 28 per cent rise in spending in cafes and restaurants during the month.

Shoppers also flocked back to clothing, footwear and personal accessory shops, where spending surged 21 per cent.

Overall, retail trade lifted by 2.7 per cent in June to $29.8bn, 8.5 per cent higher than a year earlier, the ABS figures show.

There was a 1.6 per cent quarterly fall in food retailing as the supermarket hoarding evident in the March quarter was not repeated through the three months to June. Instead, Australians switched to spending on household goods and home improvement, where there was a massive 16 per cent jump.

ANZ economist Adelaide Timbrell said while the Victorian lockdown would have a similarly dire impact on state spending as it did in April following the imposition of restrictions, “the recovery will be harder to achieve” this time.

The April collapse in retail trade was offset by an upturn in spending on home improvement and home office goods, “but that shift only happens once,” Ms Timbrell said.

Bank data has pointed to a sharp drop in spending in Victoria through July, with new ANZ figures showing spending on its credit and debit cards was down 11 per cent over the week to August 1 versus a year earlier.

Spending in Melbourne was down 17 per cent, and that dragged national annual spending growth down to 2 per cent — the weakest reading since late May.

There was also evidence in the ANZ card spending numbers that the loss of confidence associated with Victoria’s second wave and associated restrictions had bled into NSW, where growth in weekly spending moderated to 3.5 per cent year-on-year.

Excluding NSW and Victoria, spending on ANZ cards was up 8.2 per cent in the week.