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Australian Retail Sales Rise in October as Economy Revives | The mighty 790 KFGO

Posted by Wayne Cole

SYDNEY (Reuters) – Australian retail sales rebounded with a bang in October, when the lifting of many home restrictions sparked a wave of pent shopping, further evidence that the economy is rapidly recovering from a pandemic-induced slump.

Data from the Australian Bureau of Statistics on Friday showed retail sales rose 4.9% to A $ 31.1 billion in October.

That was almost double the market forecasts with an increase of 2.5%, whereby the clothing stores could show an increase of almost 28%; Department stores 22% and restaurants 12%.

The cash splash means the retail sector will be a big contributor to economic growth at A $ 360 billion.

“Real consumer spending could rebound 10% this quarter, coming very close to its pre-delta peak,” said Marcel Thieliant, senior economist at Capital Economics.

“And since the savings rate in private households is still very high, consumption will continue to grow rapidly next year.”

Signs are that the luxury has continued as national vaccination rates of 86% allowed Sydney and Melbourne to reopen with almost no restrictions.

Bank card spending this month is around 10 percentage points above pre-pandemic levels, and online retailers are signing up for Black Friday as the Christmas shopping season is in full swing.

“With reopening rallies in full swing and the threat of bottlenecks and delivery delays encouraging people to shop early, this year looks to be getting even stronger,” said Matthew Hassan, chief economist at Westpac.

This is a welcome boost to the economy as household consumption represents around 55% of gross domestic product and was the main victim of lockdowns in the third quarter.

The official GDP report comes out next week and could see a drop of around 3% in the third quarter, although Australia’s strong export performance will offset some of the pain.

CBA analysts estimate the economy contracted 3.5% in the quarter, which would be the second largest decline on record, while Westpac upgraded its forecast from an earlier forecast of a 4.0% decline to a 2.5% decline % has increased.

“The GDP report will be another publication for the history books with around half the country under lockdown,” said Gareth Aird, CBA chief executive officer for Australia’s economy.

“Still, the landscape has changed noticeably as vaccination rates are exceptionally high, the lockdowns are over and the economy is firing on all cylinders again.”

($ 1 = 1.3941 Australian dollars)

(Reporting by Wayne Cole; Editing by Himani Sarkar and Sam Holmes)

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