The Government’s $900 stimulus payments, or “cash splashes” as labelled by the Opposition, seem to be having quite a positive effect on the retail industry, driving retail sales higher than expected in March.
According to ABS figures, sales climbed 2.2 percent, as consumers spent $19.3 billion for the month.
JP Morgan economist Helen Kevans said it was quite a shock as it was higher than originally predicted.
”It’s a big shock in retail sales. It was a lot stronger than expected.”
”In anticipation of the cash handouts that were to be received in April and May, consumers went out and spent a lot on discretionary items,” she said.
Department store were the real winners with sales jumping 13.2 per cent in March, while clothing and soft goods sales climbed 6.4 percent.
TD Securities senior economist Annette Beacher said March’s surprise gain was ”no doubt boosted by $900 landing directly into bank accounts, as part of another stimulus package by (Prime Minister Kevin) Rudd.”
The cheques are still being sent out to consumers and will therefore most likely boost spending in April and leading into May, Beacher said.