CBD cafes feeling the brunt of latest drop in confidence

According to its latest economic insight, the count of cafe transactions in Melbourne and Sydney CBDs is running at 40 per cent of pre-COVID levels and around half of pre-delta levels, suggesting the popularity of remote work is persisting. 

The ongoing popularity of remote work combined with the risk of future COVID outbreaks makes it likely that the share of spending that happens online and near residential areas rather than CBDs will remain elevated.

NAB also found online spending is still the preferred way to spend money finding that consumers started 2022 in an understated fashion, following some big swings in late 2021.

Its data mapping points to a subdued start to 2022 for Australia’s retail sector, with the official Australian Bureau of Statistics measure gaining 0.3 per cent on a month-on-month basis, having fallen 4.4 per cent in December.

The latest report showed there is considerable performance variation between retail industries with hospitality suffering a substantial downturn in January while other sectors (except food) improved on the month prior.

NAB chief economist, Alan Oster said the challenges for retail remain generally less severe than some reports suggested in early January.

“The NAB Monthly Business Survey for January recorded a big hit for retail business conditions. That said, overall business confidence returned to positive levels (+3, from -12 in December),” he said. “Confidence tends to lead conditions, suggesting that business conditions could improve in February. Whether this flows through to retail – and particularly hospitality – remains to be seen.

“Labour availability continues to be a challenge for many retail businesses, although anecdotally this seems to have eased somewhat, reflecting lower omicron case numbers in the second half of January.”

Meanwhile, consumer confidence also took a hit with the index dropping 1.9 per cent last week, reversing the gains of the week before.

A large fall in confidence in Western Australia and smaller falls in NSW, Queensland and South Australia drove the drop, while Victoria recorded a small gain.