Australian retail sales soared to a record high in the final three months of last year, fueled by a combination of relaxed COVID-19 restrictions and holiday shopping that are set to underpin a robust rebound in the economy.
Sales surged 8.2 percent in the fourth quarter, recovering from a sharp drop in the prior period when the nation’s two most populous states were in lockdown to combat a COVID-19 outbreak, Australian Bureau of Statistics data showed yesterday. The gain outpaced economists’ expectations of a 7.8 percent increase.
“Consumers enthusiastically returned to discretionary spending following the end of Delta [variant of SARS-CoV-2] related lockdowns,” Ben James, director of the bureau’s Quarterly Economy Wide Statistics, said in a statement.
“Well publicized concerns over product availability and delivery timeliness led to consumers bringing forward their end of year shopping, in conjunction with a re-opening spending splurge due to pent-up consumer demand,” he said.
The result should boost policymakers’ confidence that the A$2.1 trillion (US$1.49 trillion) economy is on track for a solid recovery from a pandemic-induced contraction in the third quarter. A surge in household spending is among reasons economists expect the Reserve Bank of Australia (RBA) to raise interest rates in the second half of this year.
At the same time, trade data released last week showed a corresponding surge in imports in the final three months of last year — also fueled by high household demand — which is likely to take a cut out of GDP growth in the period.
The early part of this year is also likely to prove challenging for retailers as a surge in new cases of the Omicron variant of SARS-CoV-2 is prompting caution among consumers. This was reflected in a survey of job advertisements by Australia & New Zealand Banking Group Ltd (ANZ), showing a 0.3 percent fall last month.
Still, economists predict hiring would resume strongly, with the jobless rate already having fallen to 4.2 percent in December, just prior to the Omicron outbreak.
“It now seems that an unemployment rate with a three-handle, and much lower underemployment, will come a lot sooner,” ANZ senior economist Catherine Birch said. “This is one reason we now expect the RBA to start lifting the cash rate in September.”
The retail report also showed that clothing, footwear and personal accessories led gains, soaring 43.1 percent, and cafes, restaurants and takeaway food services jumped 18.8 percent, while food retailing, down 1.6 percent, was the only industry to fall.
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