- By the end of May, credit and debit card spending surged up, with a rise of in-store expenditure, offsetting an ease in online sales, as more stores reopened. Also, CBA data reflected that retail and entertainment spending intentions went up, while expenditure plans for home-buying, travel, and health have stabilised.
- ANZ reported an uptick in total ANZ-observed spending of 4.3% YoY in the week ending 6 June, with increased expenditure in travel and dining categories.
- As per recently released weekly ANZ Roy-Morgan report, consumer confidence increased by 0.5% to 97.5 points, with a rise in most sub-indices except future economic conditions which fell by 2.6%.
Lately, household spending is beginning to show some signs of recovery, with drifting up of weekly card spending. There has been a surge in consumer confidence boosted by the progress made towards flattening of coronavirus curve and reopening of economy much earlier than expected.
CBA data reflects a rebound in expenditure intentions
As per CBA’s data, credit and debit card spending gathered pace in the week ending 12 June on pcp, driven by a rise of in-store spending, offsetting an ease in online sales, as more stores reopened.
CommSec data reflected that value of purchases made with credit and charge cards fell by 19.1% in April, while the value of debit card purchases fell by 16.1% in April to be down 7.7% on the year.
The data showed that people had reduced the usage of credit and debit cards in April as finances were affected amid COVID-19. Nonetheless, spending picked up in May when Australia started lifting restrictions following a step by step plan.
As per Commonwealth Bank of Australia’s Household spending intentions (HSI) series, staged reopening of the economy and implementation of fiscal support policies are beginning to influence household spending.
CBA’s HSI series data is gathered from households in Australia and their expenditure intentions. The method includes using the actual spending evaluations from household transactions data of CBA and merging them with related search data from Google trends provide results to official data on customer spending.
As per CBA credit and debit card spending data up to May end 2020 reflects-
- Total spending increased by 6% in the week to 12 June compared to a year ago.
- Retail spending intentions soared higher propelled by food, general retail and household furnishing and equipment.
- Spending on drinking at hotels, pubs, bars, and personal care accelerated in May.
- Home buying and travel spending intentions showed stability after a significant drop in April especially for owner-occupiers locking in low fixed-rate mortgages.
- Health and fitness expenditure remained steady as well, while feebleness was seen in education and automobile spending intentions.
Stephen Halmarick, CBA Chief Economist, stated that the path to recovery is becoming clearer though the economy is facing recession. There are some significant alterations happening in the household spending which reflect initial signals of revival and strength in some parts of Australia propelled by modifications in the government policy.
He stated that while home buying and travel expenditure plans stabilised because of an increase in mortgage applications amid falling house prices, and as parts of the economy reopened. He predicted that going overseas for a holiday would be tough till 2021, but domestic tourism can get a substantial increase in the months ahead.
ANZ data shows an uptick in spending
ANZ data reflected that Australian consumers have started spending more as the lockdown is easing, and consumer confidence is picking up now (as observed in the first week of June). Total ANZ-observed spending was increasing by 4.3% year-on-year (YoY) in the week to 6 June. ANZ-observed retail spending growth struck 19.8% YoY for the same period.
The data reflects that for the week until 6 June includes of the following:
- Household goods growth is slowing a little but is still growing more than other retail categories.
- While fashion and dining-takeaway are still slightly diminishing from ANZ-observed retail spending growth (−8% and −9% YoY, respectively), but are much closer to normal than they were in the first week of May (−33% YoY for dining-takeaway; −35% YoY for fashion).
- Beauty spending is higher than in 2019 at 9% YOY
- Movement related spending is lifting with accommodation at −48% YOY, an increase from −77% YoY for the first week of May 2020.
- The petrol, car hiring, and other transport expenditure category also showed signs of revival than it was a month ago.
Source: Australian Economic Insight, ANZ
Moreover, there was a rise in the usage of cards over cash that could have exaggerated the growth in overall spending captured by ANZ-observed spending.
Consumer confidence picked up
Consumer confidence came back on track after showing a pause in the past week. The weekly ANZ Roy-Morgan consumer confidence rating, released on 12 June 2020, showed that confidence is returning, with modest gain of 0.5% to 97.5 points in current finances over the previous week, its third consecutive weekly gain.
Confidence in future conditions gained 1.4% back to early March level. Persistent easing of lockdown can also act as a positive force towards the sentiment.
- Current economic conditions grew 2.6% while future economic conditions declined by 2.6%
- Time to buy a household item increased by 1.3% compared to a fall of 5.7% in the previous reading
- The 4-week moving average for inflation expectations remained stable
David Plank, ANZ head of Australian Economic stated that the confidence in future financial conditions is now back to early March level, which is a substantial improvement given the effect of coronavirus induced lockdown on employment and wages.
There is an increasing expectation of disparity between May labour market and retail sales data. ANZ expects to see significant and contrasting moves in Australian data. While employment is anticipated to drop, May retail sales data is likely to rally. Also, the persistent easing of lockdown will act as an optimistic force for the sentiment.
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