Budget: Australia Booming As CE & Appliance Retailing Tipped To Grow Despite Shortages
Australian retailers could be heading to another good year claim analysts with Australians trapped in their own Country looking to spend locally, the only problem could be supply especially if a product needs a processor or chip.
Fortress Australia is alive and well with Australians spending an extraordinary amount of cash locally.
Australians are spending tens of billions locally, and as tonight’s budget gets set to be delivered by the Federal Government it’s products such as TV’s home renovations and sound gear that is coming out on top along with major upgrades of PC’s and home office gear.
In the 2019-20-year, Australian residents travelling abroad spent an estimated $64.94 billion on their trips with a lot of that cash now making into the revenue streams of retailers such as Anaconda who will shortly open a giant warehouse type store that will also sell caravans as well as tents. Also benefitting are retailers such as JB Hi Fi and The Good Guys who are seeing demand for appliance and CE gear boom.
Australians are also moving to invest in property and that is helping the likes of Harvey Norman.
Treasurer Josh Frydenberg’s budget tonight and the fate of the country’s recovery from the coronavirus recession will depend on consumers spending more than $130 billion of pandemic savings claim analysts.
Coffee shops and restaurants that have finally re-opened, are doing unprecedented business. Also, on the up is demand for furniture causing veteran Harvey Norman chief Gerry Harvey to say retail conditions were the best he had ever seen.
According to Small Cap analysts, savings are also up, as are debt repayments, despite the galloping pace of property prices.
And even the humble used car has been on the rise, up around 40% as the relative lack of available new cars and a fear of public transport made that used car all of a sudden seem much more desirable.
It is an unsurprising economic boom in retrospect but one that went largely unannounced.
Let’s not forget the so-called economic experts appearing on the ABC and in publications such as The Guardian, Age and Sydney Morning Herald who at the start of the COVID 19 pandemic predicted a 20% fall in property prices and unemployment to rise to 8.75%.
As it turned out the left-wing media who were predicting that the Morrison led Government was going to fall off a cliff and it was going to be doom and gloom for years in Australia got it wrong.
The property market barely took a pause before booming again and unemployment peaked at 7.5% before falling rapidly to 5.8% this month.
In fact, there are so many jobs around that the unemployment rate could fall even further.
Also helping to fuel the demand for appliances sound gear and a new generation of TV’s is record low interest rates and in the past government handouts in the form of JobKeeper and JobSeeker, the only thing that the doom and gloom merchants now have to peddle is Budget deficits and debt levels.
These are the same doom and gloom economists that before the COVID-19 pandemic were pushing for the Governments both Federal and State to take on more debt to fund an expanded public service and to fund social services and the unemployed.
Small Cap analysts claim the recent waves of stimulus and low interest rates have instead added fuel to an unexpected fire as the effects of lower immigration and student numbers sent the unemployment rate down rather than up as expected.
While the initial COVID-19 pandemic had an incredibly savage effect on economic growth, it was relatively short, and the economy has come roaring back to life.
By the September quarter of last year, GDP rose by a staggering 3.4% and followed that up with another 3.1% rise in the next quarter – a stunning comeback that has continued as the stored-up stimulus ammunition and unspent offshore holiday money are spent at home.
It turns out that having Australians travel at home is even more lucrative than hosting offshore tourists and there are more of them, with 11.3 million Australians travelling overseas in the year before the pandemic compared to 9.5 million tourists coming here.
Which makes the timing of the reopening of the international borders particularly interesting.
Unlike most countries, Australia has actually banned most outbound foreign travel as well as sharply rationing incoming travel combined with quarantine and the longer that situation continues, the tighter the labour market should get, and the more wage growth and inflation will get to rise.
Small Cap claims this could also put pressure on interest rates.
An earlier opening of offshore travel in both directions would most likely reduce that pressure, adding another dimension to the usual complex array of factors that feed into economic readings from employment and interest rates through to inflation and GDP figures.
For retailers, distributors and brands the pressing issue is supply and shipping costs with price rises tipped right across the board by manufacturers and component suppliers.