Buoyant confidence yet to lift spending

The recent buoyancy of consumer confidence has yet to be reflected in retail spending.

But new figures released on Wednesday also showed there is growing demand to hire workers as the economy opens up from COVID-19 restrictions and there are signs that the economy is moving out of recession.

Retail spending fell by $448.6 million or 1.5 per cent in September compared to the previous month, the Australian Bureau of Statistics says in its preliminary data for the month released on Wednesday.

Food retailing, household goods retailing, and other retailing – which includes online only retailers – recorded falls this month.

However, the ABS said these industries had recorded elevated levels of turnover during the pandemic and continue to trade above the levels seen a year ago.

Clothing, footwear and personal accessory retailing also fell, but were slightly offset by rises in department stores, and cafes, restaurants and takeaway food services.

Separately, job advertisements posted on the internet jumped 6.4 per cent in September, including a notable 11.9 per cent surge in Victoria after two months of falls during its COVID-19 lockdown.

However, over the year job ads still remain down 12.2 per cent, figures released by the Department of Employment show.

All states and territories recorded gains in recruitment activity during the month, while seven of the eight occupational groups monitored by the department also recorded increases. 

Jobs ads were strongest for technicians and trades workers, rising 9.6 per cent in September.

A pointer to future economic growth indicates Australia is moving out of recession.

The Westpac-Melbourne Institute leading index, which indicates the likely pace of economic activity three to nine months in the future, now stands in line with the average recorded over the 12 months prior to the COVID-19 pandemic.

“Consistent with the steady progression in the leading index, we expect growth of 2.8 per cent in 2021 and 3.5 per cent in 2022,” Westpac chief economist Bill Evans said.

“Key factors behind this stronger profile are a boost to consumer demand, as households spend around 50 per cent of the personal tax cuts, and a lift in business investment in response to the accelerated depreciation allowances.” 

Westpac expects that growth in both the September and December quarters of this year will be clearly in positive territory as the Australian economy opens up after the massive seven per cent economic contraction in the June quarter.

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