Victoria, Western Australia drive retail rebound in March, as lockdowns end

Retailers say there is no early evidence of a ‘fiscal cliff’ following the end of emergency income support.

Retail trade picked up in March after the February lockdowns in Victoria and Brisbane. Picture: Jenny Evans

Retailers say there is no early evidence of a “fiscal cliff” following the end of emergency income support, after retail trade lifted 1.4 per cent in March as shoppers in Western Australia and Victoria returned to the streets after February’s brief lockdowns.

Preliminary figures from the Australian Bureau of Statistics showed retail turnover was $30.7bn last month, with Australians spending about $3bn, or 10 per cent, more in shops, supermarkets and cafes and restaurants than they did before the pandemic.

Australian Retailers Association chief executive Paul Zahra said there was as yet no evidence that spending had fallen off a “cliff” following the end of emergency support payments, such as JobKeeper and the JobSeeker supplement, in March. “The moment of truth will be in the April (retail trade) numbers,” he said.

Mr Zahra said his members were “remaining positive” that the tens of billions of dollars in precautionary savings built up during the recession would support consumption in coming months, but with winter on its way, the former David Jones boss said a key concern for retailers was the slow vaccine rollout, which heightened the risk of further COVID-19 outbreaks and the potential for lockdowns.

Victorians and West Australians drove March’s retail rise as both states rebounded from February lockdowns, with turnover climbing by 4 per cent and 5.5 per cent in the month, respectively.

In contrast, trade in Queensland suffered a “minor” drop in March, the ABS said, after Brisbane endured three days of restrictions in the month.

The ABS figures showed retail trade was 2.3 per cent higher than a year earlier, when Australians flocked to stock up on the likes of canned food and toilet paper as fears around COVID-19 reached a crescendo.

Spending in cafes and restaurants jumped 6 per cent to move above its pre-pandemic levels for the first time.

Food sales in supermarkets and the like fell 1 per cent.

Economists said there was evidence that Australians were switch­ing their spending to ­services and away from such things as household goods, demand for which peaked during the work from home trend in 2020.

While preliminary ABS statistics did not reveal a detailed breakdown by sector, Citi chief economist Josh Williamson said the numbers suggested spending in the remaining categories of household goods, department stores and “other” retailing had stalled or declined.

The ABS said seasonally adjusted numbers indicated that turnover in the March quarter would be “relatively unchanged” from the previous quarter, at 0.1 per cent lower, after spending lifted 7 per cent in the September quarter and 2.5 per cent in the following three months.

Mr Williamson said the retail numbers suggested total household consumption would slow from the 4.3 per cent increase over the December quarter to about 1.9 per cent.

Citi forecasts GDP will grow by 1.1 per cent over the first three months of 2021.