Fresh retail trade figures will reveal whether Donald Trump’s tariffs have spooked Australian consumers, up-ending a gradual recovery in household spending.
Just as interest rate cuts started to boost consumer confidence, uncertainty caused by the threat of the US president’s on-again, off-again trade war sent sentiment tumbling again.
Surveys by Westpac and ANZ showed a marked decrease in reported confidence metrics following Mr Trump’s “liberation day” announcement on April 2.
Friday’s Australian Bureau of Statistics retail trade release will be the first pulse-check on the strength of household spending since then.
Even before the impacts of the tariffs are felt by consumers, uncertainty can cause consumption to fall because households become more cautious and put off spending decisions.
Reserve Bank governor Michele Bullock noted growth in consumer spending had been slower than expected since the start of the year, with falling interest rates and rising disposable incomes expected to boost consumption.
“Households are being a little bit cautious,” Ms Bullock said in her press conference following the last RBA board meeting.
“It’s not picking up as much as we thought it might given historical circumstances, but I think we will expect it to pick up.”
NAB’s online retail sales index accelerated from 0.5 per cent in March to 1.1 per cent in April, the bank reported on Thursday.
Queensland led the index with a strong return to growth following a weaker result due mainly to the impact of Cyclone Alfred in March.
“Queensland is the third-largest state for online retail sales, so a strong contribution to growth for that state helped to counter weakness in Victoria in the month,” said NAB chief economist Sally Auld.
JP Morgan economists expect the Queensland-led recovery will support sales to grow 0.4 per cent month-on-month in the ABS gauge.
“Spending at food retailers should slow as stockpiling dynamics fade, while sales at cafes/restaurants and department stores are tipped to rebound given these groups were the obvious underperformers last month,” said Ben Jarman, Tom Kennedy and Jack Stinson.
The bureau’s retail trade publication will soon be replaced by its new household spending indicator, which provides a more comprehensive overview of household consumption.
The ABS will also publish data on building approvals on Friday.
Dwelling consents are expected to bounce back to 2.8 per cent growth in April after falling 8.8 per cent in March.
Approvals have been trending upwards since early 2024 but still remain below historical peaks and well below the pace needed to meet the federal government’s target of 1.2 million new homes over five years.
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