Retail sales surged to a record high before taking one big hit

Asia's Tech News Daily

Consumer confidence has taken a hit as the Omicron variant sweeps across most of Australia but there’s one thing Australians are happy about.

Spending is falling to its lowest level since the Delta lockdowns following a pre-Christmas shopping frenzy but many people are content about their own financial circumstances, according to ANZ head of Australian economics David Plank.

ANZ-Roy Morgan reported on Tuesday that the year had begun on a downbeat note in terms of consumer sentiment, dropping 2.2 per cent from their last survey of 2021 conducted on December 18–19.

Mr Plank said the result was even weaker than it seemed, given that over the decade from 2011 to 2020, consumer confidence had risen 2.6 per cent on average in the first survey of January compared to the last prior to Christmas.

Respondents who believed the start of this year was a good time to buy a major household item declined by 4.9 per cent while positive sentiment towards current economic conditions fell sharply by 8.7 per cent – its lowest level since the last week of September 2021.

“The good news is that people are still relatively happy about their own financial circumstances,” Mr Plank said.

“This potentially sets things up for a rapid rebound once people are more confident about health outcomes.”

The latest Australian Bureau of Statistics retail figures were also released on Tuesday, showing pent-up consumer demand had resulted in record sales for certain categories in November as shoppers brought forward Christmas spending to take advantage of an extended sales period.

The ABS said consumers also got in early to minimise delivery and stock availability concerns ahead of the festive season, with total retail turnover surging 7.3 per cent from October to a staggering $33.4bn.

This included the best ever sales of clothing, footwear and personal accessories (up 38.2 per cent) and household goods (up 11.6 per cent).

Record results were also notched up for department stores (up 26 per cent).

The lagging indicator showed food retailing was the only industry to fall in November, continuing the post-lockdown pattern with a 2.5 per cent decline, while cafes, restaurants and takeaways jumped 9.3 per cent as households ventured out again following Delta lockdowns.

Retail sales surged to a record high before taking one big hit

Camera IconFood retailing was the only industry to fall in November but data for January should prove interesting as shoppers once again strip shelves bare. Brendan Radke Credit: News Corp Australia

Callam Pickering, APAC economist at global job site Indeed, said the bumper numbers may prove short-lived, with growing evidence that spending softened towards the end of December and into January in response to the growing threat of Omicron.

“Cautious households and supply shortages may weigh heavily on the retail sector through early 2022,” Mr Pickering said.

“For policymakers, this data would have been viewed favourably in the absence of the Omicron spread.

“The economic environment though is moving too rapidly to put much weight on backwards looking measures … November feels like a lifetime ago.”

On Monday, Australian Retailers Association data showed 76 per cent of shops currently had staff in isolation due to Covid-19, with one-third cutting trading hours at some locations and 20 per cent closing some locations due to staff shortages.

“For small businesses, a couple of cases can wipe out their entire workforce,” chief executive Paul Zahra said.

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