Australian retail sales beat expectations in November Business and Economics News

The numbers were strong amid a sharp drop in customers in stores and restaurants as Omicron cases surged.

Australian retail sales beat forecasts for a second straight month in November as consumers spent their savings, a reminder of how the economy was doing before a surge in coronavirus cases cast a shadow over Christmas.

Retail sales rose 7.9 per cent in November, after rising 4.9 per cent in October as much of the country emerged from severe pandemic lockdowns, data from the Australian Bureau of Statistics (ABS) showed on Tuesday.

It beat expectations for a 3.9 per cent increase, boosting sales by 5.8 per cent from November to a record A$33.41 billion ($24 billion), providing a major boost to economic growth in the quarter.

pent-up demand and an extended November sales period drove record sales in apparel, footwear and personal accessories retailing, as well as home furnishings.

“Consumers are spending ahead of Christmas to take advantage of sales opportunities and to minimise delivery and stock supply issues ahead of the festive season,” said Ben James, ABS’s director of quarterly economic statistics.

Some slowdown in December had been expected as the increasingly popular Black Friday sales brought spending forward into November, but the sudden appearance of Omicron pressure proved to be an entirely new burden on the industry.

Supply Chain Dilemma

Self-lockdowns in shops and restaurants Supermarket shelves are empty as cases surge to more than 100,000 a day and quarantine rules for contacts have blasted a hole in the supply chain.

Spending on cards fell to the lowest level since the Delta lockdown in the first week of January, with Sydney and Melbourne particularly hard hit, analysts at Australia and New Zealand Bank (ANZ) said.

ANZ’s latest consumer confidence survey on Tuesday showed a 2.2 per cent drop last week as confidence in the economy reversed abruptly.

“The good news is that people are still relatively comfortable with their finances,” said David Plank, head of Australian economics at ANZ.

“Once people have more confidence in health outcomes, this could rebound quickly.”

Households are still accumulating large savings buffers during the prolonged lockdown, while a strong labour market keeps people working and earning wages.

That’s the main reason for the Reserve Bank of Australia’s (RBA) optimism that the economy can weather the Omicron surge, although the speed at which it spreads remains surprising.

Australia also benefits from high prices for its key resource exports, which provide a timely windfall to corporate profits and government tax revenues.

The country’s trade surplus narrowed to A$9.4 billion ($6.7 billion) in November, ABS data showed on Tuesday, but only as a surge in domestic spending attracted more imports.

While exports rose 2% for the month, imports rose 6%, driven by gains in consumption and capital goods.