ABS data shows a retail rebound in January

Retail sales surged by 6.4 per cent in January, according to data released by the Australian Bureau of Statistics yesterday.

Sales of clothing, footwear and personal accessories also recorded a 7.0 per cent year-on-year increase, while sales by restaurants, cafes and takeaway services rose by 6.2 per cent, and of household goods by 5.9 per cent.

Food retailing recorded the largest monthly increase since last July, up by 4.5 per cent in January.

Australian Retailers Association CEO Paul Zahra said January sales were satisfactory overall despite the Omicron COVID variant impacting staff availability for retailers and causing supply-chain disruptions.

“Retailers have been resilient throughout the pandemic. We’re now looking forward to our CBD retailers receiving a much-needed boost in Sydney and Melbourne, in particular, where the ‘work from home’ directions have been removed along with the indoor mask mandate,” Zahra said.

Ben James, director of quarterly economy-wide statistics with the ABS, said a 1.8-per-cent month-on-month rise in January reflected strength in the retail recovery following Delta-driven lockdowns.

“The emergence of the Omicron variant and rising COVID-19 case numbers, combined with an absence of mandated lockdowns has resulted in a range of different consumer behaviours,” James said.

Western Australia saw the highest rebound in retail sales in January of all the states and territories. Here, sales rose by 8.3 per cent year on year, followed by Victoria at 8.2 per cent and Queensland at 5.8 per cent. NSW recorded a 5.6-per-cent increase.

Businesses in Southeast Queensland and parts of Northern NSW are expected to face more difficulty as a result of floods. Zahra has encouraged the government to speed up support payments so that businesses can quickly recover and rebuild.

CreditorWatch’s, Chief Economist, Harley Dale, said that the figures reinforce the volatile economic environment Australia’s retail sector finds itself in.

“There is a sense of sustained improvement in business confidence and subsequent retail activity and this won’t go unnoticed ahead of tomorrow’s RBA meeting. However, much has happened since January and we just don’t know how the board game will play out,” Dale said.

“CreditorWatch data suggests that the retail sector will continue to struggle – at least in the short term,” he added. “The continued fall in revenue for cafes, restaurants and takeaway food services is reinforced by our January CreditorWatch Business Risk Index which revealed the accommodation and food services sector fared poorly in terms of the probability of defaults and payment arrears.

“The removal of restrictions across Australia’s largest states will go some way towards rectifying this situation but it won’t be an overnight fix,” Dale concluded.

This story first appeared on our sister publication Inside Retail, supplemented with additional commentary by CreditorWatch that was provided directly to Inside Small Business