Retail sales on slide in September but still up on last year

Retail sales across Australia continued to beat a retreat in September after peaking earlier in the year as pandemic panic buyers packed shops.

Shoppers grab a bite to eat at Westfield Bondi Junction shopping centre in Sydney. Picture: NCA NewsWire/Steven Saphore

Retail sales across Australia continued to beat a retreat in September after peaking earlier in the year as pandemic panic buyers packed shops.

Slumping 1.1 per cent, on a seasonally adjusted measure, retail sales still remained up on the same time last year, despite the otherwise punishing economics of the pandemic playing out across several markets.

The slump as recorded by the Australian Bureau of Statistics was slimmer than some expected, with Bloomberg’s consensus estimate of 1.5 per cent failing to materialise.

It has been a year of choppy retail data with monthly turnover smashed in April, collapsing 17.7 per cent in the month.

But retail sales across the quarter have surged 6.5 per cent, blowing past the consensus estimate of 6 per cent.

This boost followed a 3.5 per cent fall in the June quarter.

“The quarterly rise was driven by a recovery in industries that saw sharp falls in the June quarter 2020, as well as continued strength in industries such as food retailing, other retailing and household goods,” said Ben James, director of Quarterly Economy Wide Surveys at the ABS.

Cafes, restaurants and takeaway food services and clothing, footwear and personal accessory retailing led the rises with gains of 28.1 per cent and 35.5 per cent respectively.

Food retailing saw a slight fall across September, down 1.5 per cent, driven by supermarket, liquor and other food retailing.

National Australia Bank’s director, economics, markets, Tapas Strickland, noted the strong pick-up in cafe and restaurant spending “suggests consumers are not as scarred by the pandemic as first feared”.

“This suggests consumer spending on personal services may start to recover, which could then naturally weigh on headline retail sales which is predominantly goods-heavy,” he said.

Electronics were also slammed, down 7.4 per cent after a big run-up across the first half of the year as homebound Australians loaded up on new screens and hardware.

Capital Economics senior Australia & New Zealand economist Marcel Thieliant said the strong rebound in retail sales would likely be matched by a rebound in services consumption “and has further to run as Victoria reopens”.

“The decline was broad-based, with sales in Victoria only down 0.4 per cent (month on month) following the 12.6 per cent m/m plunge in August caused by the closure of non-essential shops,” he said.

But Mr Thieliant said retail sales weren’t the whole story, with the plunge in consumption in the second quarter linked to a collapse in demand for services.

Commonwealth Bank senior economist Kristina Clifton said the September slump had been followed by a “disappointing easing” in consumer spending in NSW and Queensland late last month, according to bank data.

“But working the other way, spending in WA is holding up and Vic looks to be staging a rapid rebound following the easing in restrictions on (October 27),” she said.

ABS data shows payroll jobs fell 0.8 per cent in the two weeks to October 17.