Australian retail sales surged past forecasts for a second month in November as consumers splashed out their pent up savings, a reminder of how well the economy was doing before an explosion of coronavirus cases cast a pall over Christmas.
Figures from the Australian Bureau of Statistics out on Tuesday showed retail sales jumped 7.9% in November, adding to an already stellar 4.9% rise in October as much of the country emerged from a tough pandemic lockdown.
It blew away expectations of a 3.9% gain and left sales 5.8% up on November last year at a record A$33.41 billion ($24.00 billion), a major boost to economic growth in the quarter.
Pent-up demand combined with an extended November sales period to drive record sales in clothing, footwear and personal accessory retailing, household goods and department stores.
“Consumers brought forward Christmas spending to take advantage of sales and minimise delivery and stock availability concerns ahead of the festive season,” noted Ben James, the ABS’ director of quarterly economy wide statistics.
Some slowdown had always been expected in December as increasingly popular Black Friday sales pulled spending forward into November, but the sudden emergence of the Omicron strain has proved a whole new burden for the sector.
Shops and restaurants have seen a self-imposed lockdown from consumers as cases ballooned to over 100,000 a day, while isolation rules for contacts has blown a hole in supply chains and emptied supermarket shelves.
Analysts at ANZ say spending on the banks’ cards in the first week of January sank to its lowest since the Delta lockdowns, with Sydney and Melbourne particularly badly hit.
ANZ’s latest survey of consumer sentiment out on Tuesday duly showed a 2.2% drop for last week as confidence in the economy slammed into reverse.
“The good news is that people are still relatively happy about their own financial circumstances,” said ANZ’s head of Australian economics David Plank.
“This potentially sets things up for a rapid rebound once people are more confident about health outcomes.”
Households still have a huge buffer of savings amassed during the long lockdowns, while a strong labour market has kept people on jobs and earning a wage.
This is a major reason the Reserve Bank of Australia (RBA) had been optimistic the economy could weather the Omicron wage, though the speed of it spread has still surprised.
Australia is also benefiting from high prices for its major resource exports which has provided a timely windfall to company profits and government tax receipts.
Data from the ABS on Tuesday showed the country’s trade surplus narrowed to A$9.4 billion in November, but only because the splurge in domestic spending sucked in more imports.
While exports rose 2% in the month, imports jumped 6% on gains in consumption and capital goods.