The latest credit and debit card usage data is giving investors a new reason to feel bullish on the ASX retail sector.
Spending on cards issued by Commonwealth Bank of Australia (ASX: CBA) and Australia and New Zealand Banking GrpLtd (ASX: ANZ) have not only recovered from the COVID-19 blues but is ahead of what it was this time last year.
Charge it to the card
Card data from CBA is up 4% in the week to 22 May, while ANZ reported a 2.3% rise, according to the Australian Financial Review.
However, some of the increase in card use may be due to the growing popularity of tap and pay to limit infection transmission.
ANZ also pointed out that the spending surge may not mean actual growth in consumer spending but households dipping into their travel and holiday budgets to fund purchases.
Better than expected result
Regardless, the sharp rebound is an unexpected surprise as the shutdown of our economy to contain the coronavirus pandemic dealt a devastating blow to the consumer discretionary sector.
ANZ economist Adelaide Timbrell told the AFR that ANZ-observed retail spending is still stronger than what the bank expected before the full reopening of our economy.
Consumers in Western Australia are leading the spending charge with a 12% increase over the previous corresponding period (pcp), according to the ANZ data.
On the flipside, Victoria is the worst state as card spending dropped 5.5% pcp. This is probably because the state is the slowest to relax its lockdown rules.
Patchy results
The latest data adds to signs that the retail sector is turning the corner. Consumer discretionary stocks have enjoyed a re-rating in their share prices that was fuelled by better than expected trading updates from retailers like City Chic Collective Ltd (ASX: CCX), Baby Bunting Group Ltd (ASX: BBN) and JB Hi-Fi Limited (ASX: JBH).
But not all consumer facing stocks are benefiting from the spending recovery. Travel and entertainment spending have collapsed due to the coronavirus.
This means we will have to wait a while before Sydney Airport Holdings Pty Ltd (ASX: SYD) and Flight Centre Travel Group Ltd (ASX: FLT) enjoy a rebound in revenue.
Also, retailers who cater to tourists and overseas students won't be feeling the love from the latest card data.
International travel came to a near complete halt amid the outbreak and will be among the last sectors to recover from the COVID-19 fallout.
