- Retail sales are a measure of consumer confidence and the overall robustness of the economy.
- The latest ABS data shows that retail sales rose 1.8% in February 2022, reaching the second-highest level on record.
- Easing restrictions and overall upliftment of consumer sentiment helped businesses rebound and drove retail sales.
Retail sales data is a gauge of consumer confidence and the overall robustness of the economy. The past two years are a testament to the fact that the retail sector was one of the first sectors to get affected by pandemic-related disruptions.
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Despite such disruptions and supply-side constraints, the Australian economy has been on an expansionary path and has seen a remarkable rebound over the last few months. Consumer confidence is also seeping back into the economy, with signs of revival visible across different economic indicators. The recovery in consumer spending can be attributed to easing fears related to the Omicron outbreak.
The Australian Bureau of Statistics (ABS) has recently released the retail sales data for February 2022, which shows economic recovery is underway. Let us take a look at key highlights from the retail data:
1. Retail sales reached their second-highest on record
According to the ABS data, retail turnover rose 1.8% month-on-month in February 2022 in seasonally adjusted terms. Over one year, retail sales surged 9.1%, reaching their second-highest level on record after November 2021.
The notable rise in February came after a 1.6% rise in January 2022, which was preceded by a massive fall of 4.1% in December 2021. However, November 2021 was a significant month for retail sales, which rose 7.1% monthly to reach the highest value on record.
Australian retail sales stood at around AU$33,085 million as of February 2022, closely following November’s peak of AU$33,345 million.
2. Clear win for cafes, restaurants, and takeaways
As Omicron-related uncertainty reduced, consumers were able to move out of their houses. Australians became less cautious and opted to break free from self-imposed restrictions that were widely seen in January. The increased mobility further helped businesses recover from the minimal slowdown seen in January when Omicron-related fears gripped the economy.
More people decided to dine out and headed to outdoor places as restrictions eased. Thus, a massive uptick of 9.7% in retail sales was seen across cafes, restaurants and takeaways compared to other retailing industries. The sector benefitted from the return of staff and removal of restrictions which reduced businesses closures. In fact, the sector reached its peak in February at about AU$4,465 million.
Alternatively, non-discretionary spending suffered, as the food retailing segment saw a contraction of 2.6% in February, reflecting the largest industry fall. The industry went downhill from its heydays seen during the Omicron peak.
3. Largest rise in New South Wales
Most states observed an uptick in retail sales during February as restrictions receded. Retail data across New South Wales was the strongest, with the state observing the largest increase of 3.9%. New South Wales was followed by Victoria and Queensland, where retail sales went up 1.7% and 1.5%, respectively.
Alternatively, retail sales were down 2.9% across Western Australia, largely due to floods in late January. The state’s rail supply chain coming from South Australia suffered after the disaster struck. A larger fall was visible across the Northern Territory, where retail sales fell 3.8% during the month.