Retail spending likely declined in August

Retail spending likely declined in August

New figures are expected to show retail spending declined for a third month in a row in August, fuelling expectations of a steep contraction in the economy during the September quarter.

Stay-at-home orders trying to battle the coronavirus Delta variant intensified in August, with NSW remaining in lockdown, Victoria moving back into shutdown and the ACT also closing down.

As a result, economists' forecasts centre on a two per cent decline in the August retail trade figures when released by the Australian Bureau of Statistics on Tuesday.

However, their predictions range from a 1.5 per cent fall to a four per cent slump.

Spending has been declining since June, when it dropped by 1.8 per cent, followed up by a 2.7 per cent fall in July, as states and territories swung in and out of lockdown.

St George economist Matthew Bunny said spending patterns over recent months had been consistent with previous lockdowns.

“There have been double-digit falls across clothing, footwear and personal accessories, cafes, restaurants and takeaway food services, and department stores,” he said.

“Meanwhile, food spending has increased as people are forced to spend more time at home and stock up on essential goods.”

Domestic consumption accounts for about 60 per cent of economic growth.

Economists expect the economy could contract by as much as four per cent in the September quarter as a result of having half the population in lockdown.

Still, consumer confidence – a pointer to future household spending – has held up reasonably well in the face of lengthy lockdowns, providing hope of an economic rebound starting in the December quarter once restrictions are eased.

The weekly ANZ-Roy Morgan consumer confidence index is released on Tuesday.

Last week the index barely changed, rising 0.2 per cent nationally, although this did disguise confidence falls in NSW and Victoria on the back of weak jobs figures in both states.

However, there were sizeable increases in lockdown-free Queensland and South Australia

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