Virus lockdowns hammer July retail sales

·3-min read

Retail turnover has taken its largest dive for the year, falling 2.7 per cent in July.

The figure released by the Australian Bureau of Statistics on Friday was down 3.1 per cent on a year ago, the weakest annual growth rate in 15 months.

Overall, retail turnover hit a nine-month low of $29.8 billion.

The ABS' Ben James said lockdowns and stay-at-home orders across the country had continued to impact retail trade over the month.

"In particular, the first full month of lockdown in NSW, following the Delta outbreak in June, saw retail turnover in the state fall 8.9 per cent," he said.

"This was the largest fall of any state and territory since August 2020."

Across other states there were mixed results.

Retail trade was down 3.3 per cent in South Australia and 0.9 per cent in Queensland.

All other states and territories experienced rises with the strongest in Victoria (1.3 per cent), as some restrictions eased.

By industry, the largest falls were in cafes, restaurants and takeaway food services (down 12.3 per cent), clothing, footwear and personal accessory retailing (down 15.4 per cent), and department stores (falling 11.4 per cent).

Food retailing was up 2.3 per cent, while online sales boosted "other retailing" by 0.6 per cent.

Capital Economics' Ben Udy said the data, which the ABS has moved to a new release schedule, did not show the full impact of NSW restrictions.

"We suspect sales may fall a further 7.5 per cent month-on-month in NSW in August," he said.

"What's more, Victoria has also been forced back into a strict lockdown in August."

But he expected a gradual rebound as COVID-19 vaccination rates rose and states began easing restrictions.

CommSec's Ryan Felsman said global supply chain disruptions and rising unemployment could also weigh on consumer spending in coming months.

He noted Australian retail giants had cautioned sales are down so far in financial year 2022 due to lockdowns.

"While consumption is expected to rebound in the lead up to Christmas - assuming vaccination rates reach mandated thresholds and economies reopen - partial restrictions and border closures could mean that spending grows by a more modest 1.5 per cent in each of the first two quarters of 2022," he said.

Meanwhile, the chair of the Australian Securities and Investments Commission Joe Longo said the watchdog would do its best to support the economic recovery from the pandemic.

Mr Longo told a parliamentary inquiry the corporate watchdog would take a "reasonable" approach in the early days of new regulations due to come into force in October.

"However, where firms are not acting in good faith or where we detect conduct causing actual harm, we will not hesitate to enforce the law," he said.

"Such an approach will help ensure that consumers and investors reap the long-term benefits of these reforms."

ASIC has been criticised for taking a soft-touch approach to corporate regulation.

Mr Longo said the watchdog was committed to an "active and targeted approach to enforcement".

"By using the full suite of regulatory tools at our disposal, we will disrupt misconduct and drive quick, effective and proportionate regulatory outcomes."

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