Consumer confidence hits 13-week high

Consumer confidence; CBA card spending

Consumer confidence rose for the fifth straight week, up by 1 per cent to a 13-week high of 105.6 points.

Commonwealth Bank (CBA) national credit and debit card spending is 12.6 per cent higher for the week ending October 8, 2021 when compared to the corresponding week in 2019.

Consumer sentiment – Week ended October 10

• The weekly ANZ-Roy Morgan consumer confidence rating rose by 1 per cent to a 13-week high of 105.6 (long-run average since 1990 is 112.5). Three out of the five major sub-components rose last week.

• Confidence in Sydney rose by 2.5 per cent last week ahead of ‘Freedom Day’ on October 11, when Sydneysiders emerged from nearly four months of lockdowns. Under the more relaxed rules, retail stores and restaurants reopened yesterday with reduced capacity.

• Elsewhere, consumer confidence surged 14.4 per cent in Brisbane and 3.1 per cent in Perth last week as new Covid-19 cases remained low. Both the Queensland and Western Australian governments continue to pursue ‘Covid-zero’ elimination strategies with relatively low vaccination rates, especially when compared to NSW, Victoria and the ACT.

• But sentiment deteriorated by 3.6 per cent in Melbourne in the past week as new Covid-19 case numbers hit record highs. Confidence also unexpectedly dropped 3.4 per cent in Adelaide.

• Ahead of ‘Freedom Day’, many Aussie households began planning their Black Friday and Christmas purchases in advance, armed with a significant amount of savings built up during lockdowns. Ahead of the reopening of the NSW economy, the closely-followed question of whether it is a good ‘time to buy a major household item’ rose by 2.6 per cent last week. But consumer views on both financial conditions and the economy were mixed.

CBA card spending data – Week ended October 8

• With the vast majority of consumers in Australia’s south-east in lockdown over the winter months, retail spending fell by 6.1 per cent over the three months to August.

• The official Bureau of Statistics (ABS) data for September will also likely show a decline in retail trade.

• But the latest data from banking regulator (APRA) indicates that household deposits at banks surged during lockdowns. In fact, cash and deposits with financial institutions jumped by $17.9 billion or 4.5 per cent in August alone.

• And excess household savings have also been boosted by around $9 billion worth of federal government Covid Disaster Payments and state government payments of at least $12 billion.

• With international and regional travel still heavily restricted, households in NSW, Victoria and the ACT are expected to deploy a large chunk of these savings on local entertainment – bars, pubs, clubs, restaurants and cafes – as restrictions ease for the fully vaccinated.

• CBA Group economists reported that, “Spending rose over the fortnight to the week ending 8 October, according to CBA’s high-frequency card spending data. National spending is 12.6 per cent higher than the corresponding week in 2019, up around 3 percentage points from the 9.4 per cent pace a fortnight ago. The pick up mostly reflects a lift services spending and an acceleration in spending in NSW and Victoria prior to an easing of restrictions.”

• And, “Over the past fortnight, the pace of spending growth picked up in NSW (+4 percentage points) to 7.9 per cent above 2019 levels. It is running at its fastest pace since the week ending 3 July. Victoria spending has also lifted, now at 4.2 per cent above 2019 levels.”

Published by Ryan Felsman, Senior Economist, CommSec