The lockdown in Sydney is being predicted to have a severe effect on consumer spending in the region, but if the example of Victoria is to be followed, it should not have a lasting impact.
Alan Oster, chief economist at NAB, advised that Victoria had responded solidly after its lockdown.
“In Victoria, we now see the fastest growth rate in consumption,” he said. “It’s been a big reboot, if I can put it that way. I was also very worried (about NSW), as I’d heard lots of stories, and we saw in Victoria when even though it was announced at the end of the week, people stopped spending. I thought that might happen.”
That did not initially transpire in Sydney.
“For context: our data went until COB last Saturday: the lockdown in the four LGAs of Sydney was Friday night and was extended to broader Sydney at 6pm on Saturday. So we’ve only got less than a day,” added Oster.
“Although it was difficult to do weekly and, particularly, daily numbers, supermarkets had a really good Friday and Saturday. The net effect of all this was that, in Sydney, it went sort of sideways, maybe down a little bit, but it didn’t fall off a cliff, which is what I expect to happen next week (the week passed at time of publishing).”
The true effects of the Sydney lockdown, however, will be seen when the data from this week can be crunched.
“If you go back up to the big picture, when you look at the transactions data for retail and consumption, it’s going sideways,” said Oster.. “In consumption, it’s up about 4% relative to the start of the year, a little better than last week which was 3%, but if I’m up 4%, in 2019 that was 14%, so the general slowness from early April is still there.”
“Retail is also down a little bit, down about 4.5% from the start of the week, compared to last week which was down 2% when it should have been up 5%.”
“If you look at the data, and what you see is that the big picture story hasn’t changed. Victoria was really good in the sense that it bounced back and Sydney didn’t fall as much, which is the supermarket/toilet paper effect, to put it that way. I worry about what’s going to happen next week.”
