Consumer confidence falls, but is there more to come?

Consumer sentiment fell by 4.4% in August 2021 to reach a twelve-month low. Retail sales fell by 1.8% in June 2021 however remain historically high, while online retail sales continued their resurgence with an increase of 7.6% in June 2021.

Consumer confidence

• 1 month - (4.4%)

• 3 months - (8.0%)

• 12 months - 30.9%

Source: Westpac – Melbourne Institute Consumer Sentiment Index

National consumer sentiment fell by 4.4% to 104.1 in August 2021 according to the Westpac survey. The survey was undertaken during Greater Sydney’s extended lockdown and amid snap lockdowns in Victoria and Queensland in response to the spread of the Delta variant, significantly diminishing consumer sentiment in the most affected areas. The decline in August 2021 means the index is has fallen by over 12% since April and sits at its lowest point in twelve months. It does however remain in positive territory and above the lows of last year’s national lockdown (79.5), suggesting there is room for a further fall if the current uncertainty (and lockdowns) does not improve. The lockdown-affected states experienced the largest declines in consumer sentiment, with increased pessimism in Victoria (10.8%), New South Wales (4.1%) and Queensland (4.0%). Confidence rose in the remaining states, with Western Australia (4.1%) and South Australia (9.1%) experiencing growing optimism.

Retail sales

• 1 month - (1.8%)

• 3 months - (0.3%)

• 12 months - 3.4%

Source: Australian Bureau of Statistics

The most recent ABS retail sales data released for June 2021 showed a decline of 1.8%, however monthly sales still exceeded $30 billion, for the eighth consecutive month. Despite this month’s reduction, sales remained 2.9% greater than the corresponding month last year and 11.6% higher than June 2019. Sales decreased across the majority of states, with significant declines in Victoria (4.0%), New South Wales (2.0%) and Queensland (0.9%). This was slightly offset by moderate increases in South Australia (0.6%), Western Australia (0.1%) and Australian Capital Territory (1.3%).

Online retail sales

• 1 month - 7.6%

• 3 months - 7.5%

• 12 months - 20.6%

Source: NAB Online Retail Sales Index

Online retail sales continued its recent recovery with an increase of 7.6% in June 2021 building on a revised increase of 3.3% in May (previously 2.7%), with online sales for the twelve months to May 2021 comprising 13.3% of total retail sales during that period, 34.9% higher than the previous corresponding period. It is also worth noting that the June 2021 result represented a return to double digits of year-on-year growth in online retail sales, with year-on-year growth previously beginning to moderate following a strong run in 2020.