The big news on the Australian sharemarket yesterday was the 14% drop in the Kogan share price after a market update revealed a drop in earnings for the online retailer (see chart below).

This probably should not have been such a surprise to the market. Online retail has been falling away from its mid-2020 highs when the economy was stimulated by the super-generous JobKeeper and Coronavirus Supplement and people were in lockdown or working from home in large numbers (see chart below which includes ABS estimates up to February 2021). That said, the level of online retail turnover is still over 30% higher than it was pre-COVID.

As I discussed in a post last month (Big test ahead for economy & will we regret all the lockdowns?), we should probably expected total retail trade (see chart below) to move back towards its trend growth path now that JobKeeper and the Coronavirus Supplement are finished. That said, given we’re not travelling overseas, retail turnover will probably remain a bit higher than otherwise for the time being. Furthermore, consumer and business confidence are high, with the former supported partly by the resurgent property market (see my posts The indicators look great, but the recovery is very uneven across the economy and More action, less talk needed on vaccines).

As someone who usually sees the glass as half empty, I should note the risk of further COVID outbreaks and lockdowns across Australia, particularly when we move into Winter. The current Perth lockdown reminds us that it doesn’t take much for our state governments to lock us down again, regardless of the adverse impacts on economic activity and business confidence.

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