Consumer confidence hits 14-week high

Consumer confidence; CBA card spending & CBA Household Spending Intentions

Consumer confidence rose for the sixth straight week, up by 1.3 per cent to a 14-week high of 107 points.

Commonwealth Bank (CBA) national credit and debit card spending is 16 per cent higher for the week ending October 15, 2021 when compared to the corresponding week in 2019.

CBA Group economists also reported the Household Spending Intentions (HSI) series for September showed generalised stabilisation across home buying, retail, travel, health & fitness and motor vehicle sectors. But entertainment and education spending intentions softened.

Consumer sentiment – Week ended October 17

• The weekly ANZ-Roy Morgan consumer confidence rating rose by 1.3 per cent – a sixth successive gain – to a 14-week high of 107 (long-run average since 1990 is 112.5). Three out of the five major sub-components rose last week.

• Confidence in Sydney continued to increase following the end of the city’s 106-day Delta lockdown. But ANZ economists reported that the 3.5 per cent lift in sentiment over the past fortnight had been more subdued than the 9.2 per cent rebound in the first half of May 2020 after the national lockdown.

• Elsewhere, consumer confidence jumped 5.4 per cent in Melbourne last week with restrictions set to ease in Victoria late on Thursday night this week.

• Following the reopening of the NSW and ACT economies, the closely-followed question of whether it is a good ‘time to buy a major household item’ rose by 0.6 per cent last week.

• Vaccination rates are lifting, enabling the easing of lockdowns, so with the potential for both domestic and international travel, consumers are increasingly confident about the year ahead. In fact, more Aussies are expecting to be ‘better off’ this time next year. And more consumers are also expecting ‘good times’ for the Australian economy over the next year.

CBA card spending data – Week ended October 15

• With both NSW and the ACT exiting lockdowns last week, CBA economists said national credit and debit card “spending was 16 per cent higher than the corresponding week in 2019, up 3½ percentage points from the 12.6 per cent pace last week.” And spending is set to lift in Victoria as restrictions are eased late on Thursday. That said, the snap three-day lockdown in southern Tasmania could weigh on consumption.

• For NSW: CBA economists said, “Spending is 17 per cent higher than the corresponding week in 2019, up from the 7.9 per cent pace a week ago. There were particularly sharp increases in spending on personal care (from 54 per cent below 2019 levels to 36 per cent above, a change of 90 percentage points), drinking out (+57 percentage points), and clothing (+48 percentage points). As consumers dined out at restaurants, cafes and pubs, they reduced their spending on food and alcoholic goods (i.e. eating and drinking in).”

• For the ACT: CBA economists said, “In the ACT, spending was up 1.3 per cent on 2019 levels, from the ‑4.4 per cent pace a week ago. The ACT exited lockdown last Friday and the data captures only one day of post‑lockdown spending.”

• For Victoria and the other states and territories: CBA economists said, “Spending in Victoria continued to rise ahead of the lifting of restrictions. With lockdowns there lifting from Thursday, we expect to see a sharp increase in spending in next week’s card spending report. Spending in the other states remains very robust.”

The Commonwealth Bank (CBA) Household Spending Intentions Series (HSI) – September

• According to CBA economists, the highlights of the September HSI include:

• Home buying spending intentions stabilised in September, with loan applications down on the month but Google searches up.

• Retail spending intentions continued to stabilise in September, after a number of months of significant volatility.

• Travel spending intentions also stabilised in September after the volatility seen through 2021, as the ability to travel was limited by reinstated travel restrictions.

• Health & fitness spending intentions stabilised again in September.

• Entertainment spending intentions continued to soften in September.

• Education spending intentions continued to weaken in September.

• Motor vehicle spending intentions stabilised in September.”

Published by Ryan Felsman, Senior Economist, CommSec