Sales were down 0.1 per cent in both NSW and Queensland, 0.2 per cent in Victoria, 1.1 per cent in Western Australia, and 0.5 per cent in both Tasmania and the Northern Territory. The only increase was in South Australia (up 0.1 per cent).
It was the first back-to-back drop in national retail sales since the middle of 2017, with consecutive monthly falls in NSW, Queensland, WA, the Northern Territory and the ACT. It is the first time sales have fallen through December and January since the turn of the century and the decline was larger than the 0.9 per cent combined fall at that time.
The retail sector is one of the most at risk from the economic fallout of the coronavirus.
Global ratings agency S&P says coronavirus could cost Asia-Pacific economies $320 billion and slow economic growth to 4 per cent across the region – the lowest rate of growth since the global financial crisis.
It found the Australian economy would probably grow by just 1.2 per cent in 2020, with unemployment tipped to climb by at least one percentage point. Such a lift in unemployment would translate into a jump of more than 100,000 in the number of people out of work. The unemployment rate was 5.3 per cent in January, with almost 726,000 people looking for a job.
Asia-Pacific chief economist Shaun Roache said the Australian economy was particularly vulnerable because of its close ties to China, general softness due to the impact of the bushfires and the hit likely to be taken by the tourism and education sectors.
He said the virus posed a particular risk to the labour-intensive services sector.
“If the unemployment rate rises by up to one percentage point, as our models suggest, this will further dampen consumer confidence, drag on spending and could stall the nascent property market recovery,” he said.
Mr Morrison said it was clear the economic impact of the coronavirus outbreak was unfolding quickly.
He said that meant the government had to be careful in the way it structured its stimulus package, which is expected to be released next week. The package is expected to include an investment allowance for businesses and a lift in income for self-funded retirees.
“We have been careful to get this right, to make sure it is targeted, to make sure it is measured, proportionate and, importantly, that it is scalable,” he said.
“Scalable is important because we continue to see the disruptive impact of this in the months ahead. And we want to leave ourselves in a position to continue to respond to those in the months ahead.”
Mr Morrison said apart from an initial response, there was scope to use the federal budget due in May to deliver extra initiatives if necessary.
BIS Oxford Economics chief economist Sarah Hunter said the figures pointed to problems ahead for the economy.
“The latest data and information suggests that the economy is on course for a contraction in the March quarter, and the risk of a recession has risen significantly. We expect to see further cuts in the cash rate and a fiscal stimulus package to be announced in the near term,” she said.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.
Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age, based at Parliament House in Canberra