Retail spending hit by lockdowns in June

Household spending declined in June, hit by multiple lockdowns during the month, and the downward trend is also expected to hit retailers in July.

The Australian Bureau of Statistics confirmed retail trade dropped 1.8 per cent in June, in line with preliminary figures released last month.

States under longer periods of restrictions during the month saw a larger fall in their retail turnover with Victoria down four per cent, NSW declining two per cent and Queensland off 0.9 per cent.

However, retail sales volumes rose 0.8 per cent in the June quarter, a positive for the second quarter national accounts data due on September 1.

ABS director Ben James said households had increased their discretionary spending for much of the quarter, which included a 3.9 per cent increase in cafes, restaurants and takeaway food services retailing.

Virus lockdowns in NSW and Victoria also took their toll on the construction industry during July, ending a nine-month robust expansion.

The Australian Industry Group/Housing Industry Association performance of construction index fell 6.8 points in July to 48.7.

This takes the index below the 50-point mark for the first time since September 2020, indicating the industry is now in contraction.

However, Ai Group head of policy Peter Burn said the negative national result masked continued growth outside of NSW and Victoria and further expansions in both house building and commercial construction.

“The outlook over the next couple of months will depend heavily on the paths of the COVID-19 outbreaks and the extent of restrictions,” Dr Burn said on Wednesday.

Recent and ongoing lockdowns are expected to have dragged the entire economy into negative territory during the September quarter.

Reserve Bank of Australia governor Philip Lowe is confident Australia can quickly resume its strong recovery.

“The experience to date has been that once virus outbreaks are contained, the economy bounces back quickly,” Dr Lowe said after Tuesday’s monthly board meeting where the cash rate was left at a record low 0.1 per cent.