Retail spending rebounds, outlook hazy

·3-min read

New figures show the economy got off to a solid start to the June quarter with exports and retail spending growing in April, although another extensive lockdown in Victoria has cast doubt over the outlook.

Construction data also showed the industry is expanding, led by a robust home building sector.

Both exports and retail spending had been a drag on growth in Wednesday's March quarter national accounts, despite the economy growing by 1.8 per cent and 1.1 per cent over the year.

Retail sales grew by 1.1 per cent in April, confirming preliminary figures posted last month by the Australian Bureau of Statistics.

"Sales have been buffeted by multiple state lockdowns this year, albeit with most being very brief," Westpac senior economist Matthew Hassan said.

"April marked a relative reprieve in these disruptions but May, and especially June, are set to see renewed COVID turbulence following Vic's move into a somewhat longer 14-day lockdown."

The Morrison government on Thursday announced a disaster-style payment for those impacted by lockdowns of more than seven days - $500 for people who work more than 20 hours a week, and $325 who work less.

No costing for this emergency payment has been made and Friday's national cabinet will decide how the states and the federal government will split the bill.

"Support continues to roll out," Treasurer Josh Frydenberg told reporters in Canberra.

"That support has helped to see the Australian economy recover so strongly ... (and) outperform the rest of the world."

However, it is unclear what impact the Victoria lockdown will have on the national economy going forward.

Addressing a Senate hearing on Wednesday evening, Reserve Bank deputy governor Guy Debelle said recent three-day lockdowns around the country had little lasting impact on household spending and the overall economy.

"We will just have to wait and see. It is longer than three days clearly, but given it's been one weekend, it's too early to tell," he said.

Meanwhile, Australian exports recovered by three per cent in April, pushing the trade surplus out to $8 billion and more than $2 billion larger than March.

"The outlook for May looks rosy, with commodity prices having increased 5.9 per cent in May and rural exports expected to continue rising," ANZ economists said in a note to clients.

Imports declined three per cent in the month.

The construction industry continues to expand at strong pace, edging back only slightly from the record high in March.

The Australian Industry Group-Housing Industry Association performance of construction index eased 0.8 points, but at 58.3 per cent in May it still indicates the industry is comfortably in expansionary territory.

Ai Group head of policy Peter Burn said new orders were growing strongly again in May.

"(With) the pipeline of infrastructure projects stretching over a number of years, there is a clear need for the industry and governments to move together to ensure there is adequate capacity in the sector and its supply chains to meet ongoing demand," Dr Burn said.