© Reuters. FILE PHOTO – People stroll through shopping centers as they wait for businesses to open to unvaccinated customers in response to COVID-19 regulations. This follows months of locking down orders in order to reduce the increase in cases in Sydney (Australia).
SYDNEY – Australian retail sales rebounded strongly in October following the removal of many home-based restrictions. The result was a surge of pent-up spending, further proof of the rapid recovery of the economy from a panic-driven slump.
The Australian Bureau of Statistics released data on Friday showing that retail sales rose 4.9% to A$31.1 Billion ($22.31 Billillion) in October, extending September’s strong 1.7% jump.
This was nearly double the market expectations of a 2.5% increase, with clothes stores reporting gains almost 28% and department stores reporting 22% respectively. Restaurants reported a 12% rise.
This cash injection will see the A$360billion retail sector make an important contribution to economic growth.
Marcel Thieliant (a Capital Economics senior economist) stated, “Real consumer expenditure could bounce back 10% this quarter. It would leave it very close its pre-Delta peak.”
“And because the household savings rate is still high, there will be a continued increase in consumption next year.”
There are signs that this splurge continues as the national vaccination rate of 86% has allowed Sydney to reopen without any restrictions.
This month’s spending on bank cards is around 10% higher than pre-pandemic levels. Online retailers also report a record Black Friday, as Christmas shopping gets underway.
Matthew Hassan (Westpac senior economist) said that this year is set to be even stronger with rebounds opening in full swing, and the risks of delivery delays and shortages encouraging consumers to shop earlier.
Given that household consumption is approximately 55% of GDP, this gives the economy a boost. This was the most significant casualty in lockdowns last quarter.
Next week’s official GDP report will be available. It could reveal a drop of about 3% for the third quarter. However, Australia’s excellent export performance should offset some of this pain.
CBA analysts estimate that the economy contracted 3.5% during the quarter. Westpac, however, has raised its forecast to show a contraction by 2.5%, compared with a previously predicted 4.0% plunge.
Gareth Aird from CBA, head of Australian economics said that the GDP report would be another historical release because half of Australia was locked down.
However, the world has seen a dramatic shift in the last few years. Vaccination rates are extremely high and lockdowns have ended. The economy is now firing on all cylinders.
($1 = 1.3941 Australian dollars)
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