The first full week of Sydney reopening and NSW jumped (up around 15% in the week – reflecting hospitality and personal services (e.g. hairdressers) reopening, but other states showed weakness.
This week brought the first full week of Sydney reopening and our expectations were high. NSW did jump (up around 15% in the week – reflecting hospitality and personal services (e.g. hairdressers) reopening, but other states showed weakness. Western Australia dropped substantially, while Queensland tracked sideways following a big drop the week prior. Victoria saw continued pressure, but this will almost certainly change when reopening begins this Friday (for home visits, hospitality and personal services) and around a week later for further retail reopening and intrastate travel. Smaller states saw sharp falls two weeks ago and have not recovered.
Consumption now up 5.7% from the beginning of the year (and was essentially flat last week) but the same week in 2019 was up 16%. Clearly weakness remains, with a gap of around 10% compared to 2019 seasonality. Retail saw a smaller gap (in the order of 5%), reflecting sections of retail still open in lockdown areas, but hospitality remained much weaker, with a gap closer to 20%. This reflects closed venues in lockdown areas, combined with limited interstate and international tourism.
Our inward credits data tracked sideways last week (currently 111.1 annual base reset), but was broadly in line with the 2019 seasonal pattern (118.5). SMEs were in a similar position, but recovering from a weak print the week prior. Retail credits data remains soft, standing at 84.1 compared to 98.1 at the same time in 2019.
Where does this leave us for Q4? Certainly the NSW jump is welcome, although not unexpected. While Victoria remains soft, we have every expectation of recovery in the coming weeks. However, we will closely watch recent weakness in non-lockdown states (albeit from a high base). Likewise, with online retail growing so strongly during the pandemic, it is possible that traditional “bricks and mortar” retail will not bounce back as quickly post-lockdown, as consumers keep buying online. On the other hand, our data show the end of previous lockdowns associated with slowing online retail spending growth We will have a better read on these potential trends in coming weeks.
