Lockdown Effect: Australian Retail Sales Contract in Q3

Lockdown Effect: Australian Retail Sales Contract in Q3

Posted Thursday, November 4, 2021 by
Aiswarya Gopan • 1 min read

Australia’s retail sales posted a decline during the third quarter of the year on account of the lockdowns imposed across Sydney and Melbourne; however, they are expected to bounce back in the current quarter as the economy reopens and COVID-19 vaccinations roll out faster. According to data released by the Australian Bureau of Statistics (ABS), retail sales contracted by 4.4% to AUD 85.3 billion.

While the pace of decline comes after the second quarter saw retail sales post a slight growth of 0.7%, the level of contraction was weaker than a 4.6% drop economists had previously forecast. The drop came on the back of a sharp fall in sales volume across discretionary spending sectors, such as eating out, apparel and personal accessories.

Director of Quarterly Economy Wide Statistics at ABS, Ben James, states, “The Delta outbreak from late June led to protracted lockdowns in many mainland jurisdictions, with the restrictions causing many retailers to close their physical stores throughout the September quarter. This resulted in the largest quarterly fall in national sales volumes ever recorded.”


The data failed to drive much of an effect on AUD/USD which continues to hold around the $0.74 level, as investors remain optimistic about the rebound in Q4. In addition, weakness in the US dollar is also keeping the currency pair supported, preventing it from being affected by the economic data release.

At the time of writing, AUD/USD is trading at around $0.745. In the short-term, moves in the currency pair will be driven by sentiment around the US dollar, especially after Fed Chair Powell played down hopes of any plans to hike interest rates soon.

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