Australian Homes Loading Up for Lockdown Sent Retail Soaring

(Bloomberg) -- Australia’s frenzied stockpiling of food and other household goods ahead of coronavirus lockdown restrictions sent retail sales soaring in March.

Sales surged 8.5% from February, when they advanced an upwardly revised 0.6%, the Australian Bureau of Statistics said Wednesday. For the the first three months of 2020 retail volumes rose 0.7%, well below the 1.8% forecast, suggesting a modest contribution to first-quarter gross domestic product.

“There was unprecedented demand in food retailing, household goods, and other retailing,” Ben James, the bureau’s director of quarterly economy-wide surveys, said in a statement. “However the impact of social distancing regulations saw sales fall in cafes, restaurants and takeaway food services, and discretionary spending in clothing footwear and personal accessory retailing, and department stores, was also weak.”

March data saw “both the strongest rise in food retailing, and the strongest fall in cafes, restaurants and takeaway food services, that we have seen in the history of the series,” James said.

The data showed:

• Food retailing soared 24.1%; other retailing rose 16.6%; and household goods gained 9.1%
• Cafes, restaurants and takeaway food services slumped 22.9%; clothing, footwear and personal accessories tumbled 22.6%; and department store spending fell 8.9%

Australians swamped supermarkets in March to buy food and other essentials on an unprecedented scale, forcing some stores to limit purchases. That prompted supermarkets Woolworths Ltd. and Coles Group Ltd. to go against the grain of job shedding and hire 22,000 and 12,000 new employees, respectively, to meet demand.

Coles’ sales rose 13.1% in the first three months of the year as shoppers stocked up on essentials and liquor, while Woolworths reported a 10.3% jump in food sales as consumers hunkered down.

What Bloomberg’s Economists Say

“Slim hopes that Australia may have squeaked through the coronavirus downturn without recording a technical recession have been quashed by retail sales volumes rising only moderately in 1Q 2020. The quarterly data reveals that the pre-lockdown spending surge was part demand, and part prices, with retail prices rising over 1Q 2020 at their fastest pace in nearly 20 years.”

James McIntyre, economist

In volume terms, gains were moderated by strong prices of food especially, the ABS said.

©2020 Bloomberg L.P.