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Consumer confidence hits 14-week high

More Queensland and NSW restaurant diners
Consumer confidence; CBA card spending; Restaurant reservations; Public transportation

Consumer confidence: The weekly ANZ-Roy Morgan consumer confidence rating rose by 1.6 per cent to a 14-week high of 95 (long-run average since 1990 is 112.6). Confidence has lifted in six of the past seven weeks. Sentiment is up by 45.5 per cent since hitting record lows of 65.3 on March 29 (lowest since 1973).

Commonwealth Bank (CBA) card spending: According to the Commonwealth Bank (CBA), card spending in the week to September 25 was up 4 per cent on a year ago, compared to a 4.3 per cent lift for the week ended September 18. Online spending rose 20.2 per cent on a year ago (previous week: +19 per cent), but in-store spending was down 3.5 per cent (previous week: -2.4 per cent).

Kepler Analytics reported that aggregate retail sales rose by 6.2 per cent last week (September 27), but were still down 25.3 per cent on the year. Average transaction value fell by 2.7 per cent last week, but was still up 21.8 per cent on a year ago. Passer-by traffic fell 1.9 per cent last week to be down 53.4 per cent on the year. The national weekly retail store shut down rate fell to 27 per cent (previous week: 29 per cent) with Victoria’s rate at 80 per cent (prior week: 83 per cent).

Restaurant dining: The number of seated diners at Australian restaurants was up 8.3 per cent on September 27 compared with the same day a year earlier, an improvement from the 4.1 per cent drop recorded on September 20, according to OpenTable. Sit down diners fell by 79.2 per cent in Victoria (previous: -86.5 per cent), but were up by 61.5 per cent in Queensland (previous: up 60.2 per cent) and 56 per cent higher in NSW (previous: +37 per cent).

Demand for public transportation – as measured by the urban trip planning app Moovit – mostly rose over the week to September 23 (compared with the pre-pandemic level of January 15) from a week earlier in most of Australia’s biggest cities: Sydney & NSW: -39.2 per cent (previous week: -41.8 per cent); Perth: -35.7 per cent (previous week: -31.8 per cent); Brisbane & South-East Queensland: -38.2 per cent (previous week: -39 per cent); Melbourne & Victoria: -80.2 per cent (previous week: -82.8 per cent).

The consumer confidence and credit card spending figures have implications for retailers, and other consumer-focussed businesses.

What does it all mean?

• Consumer confidence has lifted in six of the past seven weeks and is now at the highest level in 14 weeks as restrictions in Melbourne begin to ease on the back of slowing new COVID-19 infection rates. And with NSW recording a second day of zero cases on Monday, reports that NSW could potentially enjoy more relaxed restrictions in the next fortnight probably boosted sentiment.

• The ANZ-Roy Morgan sub-index measure of ‘current economic conditions’ remains negative, but has lifted by 19.6 per cent over the past fortnight to -29.2 points. The eventual re-opening of the Victorian economy, surprise fall in August unemployment and growing expectations for significant spending measures in Tuesday week’s October 6 federal budget are likely behind the improvement.

• Economists expect Federal Treasurer Josh Frydenberg to announce an array of fiscal initiatives, including personal income tax cuts, a business investment allowance tax break, a potential wage subsidy ‘successor’ to JobKeeper, infrastructure investment and skills and training programs focused on creating new jobs.

• Several high-frequency data points complement that improvement in consumer sentiment in September. The Commonwealth Bank’s (CBA) credit and debit card spending data has stabilised at positive levels – to be up 4 per cent over the week to September 25 when compared to a year ago. Online spending remains particularly strong, up by 20.2 per cent on a year ago. And Kepler Analytics’ weekly index highlighted a 6.2 per cent lift in retail sales last week (September 27). Kepler’s national measures of retail store shutdowns eased from 29 per cent to 27 per cent with Victorian store closures at 80 per cent last week, down from 83 per cent in the previous week.

• Last week, the number of seated diners at Australian restaurants was up 8.3 per cent on September 27 compared with the same day a year earlier, an improvement from the 4.1 per cent drop recorded on September 20, according to OpenTable. Sit down diners fell by 79.2 per cent in Victoria (previous: -86.5 per cent), but were up by 61.5 per cent in Queensland (previous: up 60.2 per cent) and 56 per cent higher in NSW (previous: +37 per cent).

What do the reports and figures show?

Consumer sentiment – Week ended September 27

• The weekly ANZ-Roy Morgan consumer confidence rating rose by 1.6 per cent to 14-week highs of 95 (long-run average since 1990 is 112.6). Confidence has lifted in six of the past seven weeks. Sentiment is up by 45.5 per cent since hitting record lows of 65.3 on March 29 (lowest since 1973).

• Four out of five of the major components of the index rose last week:

The Commonwealth Bank (CBA) credit card data – Week ended September 25

• According to Commonwealth Bank (CBA), card spending in the week to September 25 was up 4 per cent on a year ago, compared to a 4.3 per cent lift for the week ended September 18. Online spending rose 20.2 per cent on a year ago (previous week: +19 per cent), but in-store spending was down 3.5 per cent (previous week: -2.4 per cent). Victorian card spending was down 11.2 per cent on a year ago (previous week: ‑11.1 per cent), but South Australian spending was up 15.2 per cent (previous week: +14.9 per cent) compared to a year ago.

• CBA noted, “Annual spending growth in all jurisdictions broadly tracked sideways over the past week. In Victoria, recreation and transport spending are weak. A partial reopening of state borders will help to lift spending on transport and recreation nationwide. A gradual easing of restrictions in Victoria should see a pick‑up in consumer spending but we do not see this happening in a meaningful way until November this year. An accelerated reopening could bring this timeline forward.”

Kepler index of retail sales activity – Week ended September 27

• Kepler Analytics reported that aggregate retail sales rose by 6.2 per cent last week (September 27), but were still down 25.3 per cent on the year. Average transaction value fell by 2.7 per cent last week, but was still up 21.8 per cent on a year ago. Passer-by traffic fell 1.9 per cent last week to be down 53.4 per cent on the year. The national weekly store shut down rate fell to 27 per cent (previous week: 29 per cent) with Victoria’s rate at 80 per cent (prior week: 83 per cent).

OpenTable restaurant reservations – Week ended September 27

• The number of seated diners at Australian restaurants was up 8.3 per cent on September 27 compared with the same day a year earlier, an improvement from the 4.1 per cent drop recorded on September 20, according to OpenTable.

• Sit down diners fell by 79.2 per cent in Victoria (previous: -86.5 per cent), but were up by 61.5 per cent in Queensland (previous: up 60.2 per cent) and 56 per cent higher in NSW (previous: +37 per cent).

Moovit change in public transport demand – Week ended September 23

• Demand for public transportation – as measured by the urban trip planning app Moovit – mostly rose over the week to September 23 (compared with the pre-pandemic level of January 15) from a week earlier in most of Australia’s biggest cities:

Sydney & NSW: -39.2 per cent (previous week: -41.8 per cent)

Perth: -35.7 per cent (previous week: -31.8 per cent)

Brisbane & South-East Queensland: -38.2 per cent (previous week: -39 per cent)

Melbourne & Victoria: -80.2 per cent (previous week: -82.8 per cent).

What is the importance of the economic data?

• The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.

• The weekly Commonwealth Bank (CBA) credit & debit card spend data is derived from transaction authorisations to give a near real-time view. This means that cancelled authorisations, refunds, reversals, etc. will not be included. Data has not been adjusted for effects of consumers substituting between cash and card payments. CBA merchant facility spend data is derived from the Merchant Acquiring System which includes net sales from both CBA and Other Financial Institution (OFI) domestic and international cards.

• Kepler Analytics have “sensors in over 3500 locations globally, collecting traffic and other consumer behaviour data anonymously.” Kepler notes, “Our clients provide us with their daily sales targets, actual POS sales and other specific data points on which they measure and manage their businesses. By aggregating and anonymising this information, we can provide unique insights into the Retail Industry as a whole.”

• OpenTable tracks more than 54,000 restaurants on its reservation site. The data captures online and phone reservations as well as walk-ins. Take-out and deliveries are excluded. Only states or cities with 50+ restaurants in the sample are included.

• Moovit analyses the repercussions of Coronavirus (COVID-19) on public transportation ridership, relative to the typical usage before the outbreak began. Updated daily, Moovit’s insights show the percentage of changed demand for public transit around the world.

What are the implications for investors?

• Attention now turns to an array of housing and building-related data releases over the coming days – a key support for consumer sentiment. The housing market is holding up for now with home prices expected to lift in ‘virus free’ cities Adelaide, Brisbane and Perth in September. CoreLogic’s weekly measure of mortgage activity rose by 3 per cent over the week to September 27. And Domain reported that Sydney’s preliminary auction clearance rate of 69.7 per cent last weekend was the strongest since March – before government social distancing measures were introduced.

• While Spring home buying demand is solid – supported by the $688 million HomeBuilder scheme – the housing market still faces some challenges. JobKeeper and JobSeeker payments have been tapered, unemployment could rise further, inbound migration will remain at record low levels and bank mortgage relief will eventually end.

Published by Ryan Felsman, Senior Economist, CommSec