Retail spending climbs 2.4 pct in June
July 22, 2020
(Australian Associated Press)
Retail sales in Australia rose a solid 2.4 per cent in June, as people flocked to reopened cafes and restaurants and spent more on clothing in the first full month of trade since the lockdowns ended.
Turnover for the month rose to $29.7 billion and was up 8.2 per cent from a year ago, according to preliminary figures released by the Australian Bureau of Statistics on Wednesday.
The overall rise in June comes on top of a huge 16.9 per cent jump in May, which followed a record 17.7 per cent fall in April.
“Households seem to be transitioning to a ‘new normal’ of spending, where elevated retail spending replaces expenditure on travel and entertainment,” ANZ economists Adelaide Timbrell and Catherine Birch wrote in a research note.
Cafe, restaurant, and takeaway food service spending jumped more than 20 per cent for the second consecutive month but was still 17 per cent below the level in June 2019.
Clothing, footwear, and personal accessory spending gained 19 per cent, but remained six per cent lower from a year ago.
Food retailing rose 0.9 per cent, as a rise in supermarkets and grocery stores spending was offset by a fall in liquor retailing, the ABS said.
There was some evidence of stockpiling at the very end of June, particularly in Victoria, which has reimposed lockdowns in parts of the state.
St George Banking Group chief economist Besa Deda says the figures are encouraging, as retail spending represents a large part of economic growth.
But she cautioned that “the recovery that is underway is fragile, it is vulnerable to further shocks, and that’s related to consumer confidence.”
There might be further falls in July as pent-up demand subsides, but overall household good spending was well above pre-COVID levels, Sarah Hunter, chief economist for BIS Oxford Economics, said.
Household goods retailing fell in June but remains 23 per cent above June 2019 levels, the ABS data showed.
This confirms that consumers are substituting spending on services – particularly travel – towards retail goods.
“Looking ahead, overall spending is likely to remain elevated in the very near term, with households likely to continue to substitute retail goods for services (conversely, spending in cafes and restaurants will remain subdued),” Ms Hunter wrote in research note.
But the longer term will be more challenging, with the tapering of the JobKeeper and JobSeeker schemes expected to weigh on household spending from October, she added. Job losses recently materialising in the construction and professional services sectors are also likely to be a drag on retail spending, Ms Hunter said
Money Smart (ASIC)
During these uncertain times, you might be nervous about your investments. It’s important to consider your long-term goals and make well-informed decisions.
Here are some steps to take with your super or investments in shares to ride out ups and downs in the investment markets.
1. Avoid focusing on market volatility
When investment markets are volatile, it can be a good time to review your investment strategy. But don’t make any rash decisions based on recent market falls.
Some investors panic when markets fall and decide to convert all their investments to cash. However, this means you lock in your losses and you miss out on any investment market recovery. Markets typically recover over the long-term.
Diversification across a broad range of asset classes is the best defence to ride out the ups and downs in the markets at any time.
Super in an uncertain investment market
If you’re close (5 years or less) to retirement, understand your retirement income options, take your time and avoid hasty decisions.
Consider getting financial information and guidance from:
- a licensed financial adviser
- your super fund
- a Services Australia Financial Information Service officer
2. Don’t try to time the market
It’s not a good idea to sell shares or other investments based on daily headlines.
Even the most skilled and experienced investors have difficulty predicting the best time to buy and sell. You might sell your investments only for markets to recover soon after.
Holding onto your investments, even during downturns, can be an effective strategy if your financial goals and situation haven’t changed.
3. Review your financial goals
Unexpected events can impact your financial goals.
Talk it over with your family, consider your long-term goals and only make well-informed decisions
If you’ve become unemployed, for example, you might need to cash out some of your investments for short-term expenses. Only do this if you have no savings to draw on and have explored all other options such government support and applying for financial hardship.
If you do have to draw on your investments, only cash out some of them, if you can. That way you can minimise your losses and still have some money invested when the market begins to recover.
If you’re using a financial adviser, now is a good time to ask them to review your financial plan.
4. Beware of investment scams
Beware of cold-calls and unsolicited investment offers and the promise of big returns. If it sounds too good to be true, it usually is.
Making hasty decisions, like panic selling or buying shares, can make you more vulnerable to investment scams.
Scammers exploit fear with fake investment offers promising to recover your losses.
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Success in generating long-term wealth has a lot to do with awareness of the tricks money can play on your mind. How many of these do you recognise?
Money and emotion are strongly connected. Purchases often mean something to us personally. They broadcast our identity. They make us feel special. They reward us for hard work. But in the background, behind our most basic reasons for spending or saving, our mind plays further tricks. If you become aware of these tricks then the added clarity will benefit your wealth generation.
1. Bigger is better
Consider the purchase of a new car. You have just spent $35,000, so when the salesperson offers you a special deal – a $700 upgrade pack including a towbar, carpet mats and alloy wheels – it seems like a bargain. But would you happily go out today and spend $700 elsewhere? How many grocery trips does that represent? And many of us will grab the opportunity to buy a $100 item that has had its price slashed to $50. But if a $5000 item is discounted to $4950, then the $50 saving is not nearly as attractive. Remember that a dollar is always worth a dollar, no matter how much or how little the related purchase happens to be.
2. Discounted = good value
It is increasingly rare to see a price ticket that is not marked down. But is the $130 jacket, marked down from $210, actually better value or better quality than the $100 jacket in the shop next door? Ignore the higher price (known as an ‘anchor’, intended to make the discounted price seem cheap) and consider the actual value. This works in several other situations. For instance, many restaurant menus offer a high-priced entrée and main to make the other options seem cheap. And in your local electronics store, the fancy $500 toaster is only really there to make the $140 toaster seem like a bargain.
3. Gifted money is not worth investing
You receive money as a gift so instead of adding it to savings, investment or retirement funds, you put it straight into the spending budget. Your mind is de-valuing the money, because it was a gift. In other words, you didn’t have to work for it, so it is somehow of less value or not worthy of investment. But if you regularly invest a specific percentage of your income, then consider investing the same percentage (or more) of gifted money.
4. Small change is of little value
How much small change do we leave lying around, or in a container, or in the glove box, then happily spend it on little things without a second thought? But consider that a small money box for children can easily hold $400 in gold coins, and suddenly that small change becomes a very real driver of financial change. The same goes for small pay rises, which may not seem to make any difference right now but can make a very real difference over the long term.
5. Money buys happiness now
Buying something today produces a very measurable result. Saving for the future and putting money into superannuation or investments is difficult to quantify in terms of lifestyle. So make it quantifiable. Figure out your average monthly expenditure and buy future months of happiness with your savings and investments.
6. Reduced mortgage repayments represent a saving
In an environment of low interest rates, many home owners have been offered a drop in mortgage repayments. That is great for our household budgets, right? But consider that if you drop your repayments, you will spend more on the mortgage in the long run and will lose more money in interest, as you take longer paying off the mortgage compared to keeping your repayments at the same level.
Changing your money mindset
If you want to know more about how to separate money from emotion, your financial adviser should be the first person you speak to. They will help you change your money mindset so you can recognise traps and win the money mind games.
General information only: The information in this message is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. It should not be construed as financial, taxation or legal advice. Before acting on the basis of this information, you should consider its appropriateness to your own objectives, financial situation and needs. Individual advice can be provided by contacting our office at firstname.lastname@example.org or by phone (08) 9330 8886.