November 30, 2021: -Australian retail sales rebounded with a bang in October as the lifting of many stay-at-home restrictions unleashed a wave of pent-up shopping, further evidence the economy is recovering from a pandemic-induced slump.

On Friday, the Australian Bureau of Statistics data showed retail sales jumped 4.9% in October to A$31.1 billion, extending September’s already robust 1.7% bounce.

That was double market forecasts of a 2.5% increase, with clothing stores boasting gains of nearly 28%, department stores 22%, and restaurants 12%.

The cash splash means the A$360 billion retail sectors will make a significant contribution to economic growth.

“Real consumer spends that could bounce back by 10% this quarter, leaving it very close to its pre-delta peak,” said Marcel Thieliant, a senior economist at Capital Economics.

“And with the household savings rate very high, consumption will continue to expand at a rapid pace in the coming year.”

Signs are the splurge has continued as national vaccination rates of 86% are allowing Sydney and Melbourne to reopen with nearly no restrictions.

Spending on bank cards this month is running around ten percentage points above pre-pandemic levels, and online retailers flag a bumper Black Friday as the Christmas shopping season gets into complete swing.

“With reopening rebounds in complete swing and risks of shortages and delivery delays encouraging people to shop early, looks set to be stronger still,” said Matthew Hassan, a senior economist at Westpac.

That is a welcome boost to the economy, given household consumption accounts for almost 55% of gross domestic product and was the main casualty of lockdowns in the third quarter.

The official GDP report is out coming week and could show a fall of almost 3% in the third quarter, though Australia’s strong export performance will offset the pain.

Analysts at CBA estimates the economy is shrinking 3.5% in the quarter, which would be the second-largest decrease on record, while Westpac has incoming its forecast to a contraction of 2.5% from a prediction of a 4.0% dive.

“The GDP report will be one more release for the history books as around half the country was in lockdown,” said Gareth Aird, CBA’s head of Australian economics.

“Yet the landscape is changing markedly as vaccination rates are exceptionally high, lockdowns are over, and the economy starts to fire on all cylinders.”