Low Covid states leading way with retail recovery

Consumer spending is rising in Western Australia and Queensland, a positive indicator for NSW and Victoria’s economic recovery from the pandemic.

Consumer spending is rising in Western Australia and Queensland. Picture: iStock

Consumer spending is rising in Western Australia and Queensland, a positive indicator for NSW and Victoria’s economic recovery from the pandemic.

On the weekend, Australia reported its first day of no local new coronavirus cases since June, as more parts of the economy reopen. In Melbourne, retailers and hospitality were met with pent-up demand after the city’s lockdown ended last week.

Analysts at Citibank said the low prevalence of COVID case numbers in WA and Queensland had led to a snapback of consumer and business activity. Western Australian retail sales have been up 20 per cent year on year for several months.

“With travel and social restrictions, there have been fewer alternatives for discretionary spending, which has seen a prolonged increase in retail sales,” analysts led by Edward McKinnon wrote.

“The length and magnitude of this period of growth in WA is significant and bodes well for other states as they emerge from restrictions.”

The analysts predicted that there was likely to be pent-up retail demand that would translate to a strong Christmas trading period “as consumers look for something to celebrate in an otherwise challenging 2020”.

Despite the growth in retail sales, shoppers are heading to bricks and mortar stores less often, with online retail shaping up to be a more permanent feature of the new normal.

Online shopping sales in Western Australia have grown more than 30 per year on year. But the increase lags behind growth in more restricted states where customers have been forced to shop online.

In Victoria’s first week since stage four restrictions ended, retail sales bounced back to -4.9 per cent year on year. Even in states that have returned to normal, online sales have grown to above 30 per cent, suggesting the uptake of online shopping is here to stay.

The Citi analysts said Victoria’s lengthy stage four lockdown, which lasted more than 100 days, could result in a more permanent shift to online in the state.

In Queensland and Western Australia workplace occupancy levels were “virtually back to normal”. NSW continues to lag behind, despite case numbers hovering in the low single digits.

Despite its hard border closure and low coronavirus numbers, Western Australia still has lowered mobility compared to pre-COVID levels. Trends suggest that people will be taking longer to use public transport.