In Australia, the lockdown in Melbourne in July was of similar intensity to the initial lockdown in April. Even so, retail sales only fell by 2% m/m in Victoria which still left them around 2% above pre-virus levels. Part of that strength may reflect renewed panic buying. But it’s clear that the second lockdown did not curb spending by nearly as much as the first, which resulted in retail sales falling 15% below pre-virus levels. That probably reflects growing fatigue with restrictions on activity and less fear of getting the virus. The result of the weaker adherence was that the spread of the virus continued and a stricter lockdown had to be imposed in August. The second lockdown looks to have been more effective at reducing activity with Apple Maps movement data showing fewer routing requests than in April. What’s more, the recovery in other states appears to be stalling. A larger hit to consumption in August and beyond is inevitable but we still expect GDP to expand in Q3.
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