Consumer spending intentions hit 5-month high

Consumer confidence; CBA card spending

The weekly ANZ-Roy Morgan consumer confidence rating rose by 0.5 per cent to 108.

Consumer views on whether it is a good ‘time to buy a major household item’ rose by 2.2 per cent last week to a 5-month high of 16.8 points.

Commonwealth Bank (CBA) national credit and debit card spending is 20.6 per cent higher for the week ending December 10, 2021 when compared to the corresponding week in 2019.

What does it all mean?

• Consumer confidence, as measured by ANZ and Roy Morgan, rose by 0.5 per cent last week. The sentiment gauge is up by 1.9 per cent so far in December as Aussies learn to live with coronavirus as government restrictions are pared-back amid higher vaccination rates.

• The survey was taken prior to the re-opening of the Queensland state border to fully vaccinated travellers from both NSW and Victoria yesterday, with varied outcomes across the major states and territories. ANZ economists reported that, “Consumer confidence in Queensland rose by 5.2 per cent. Confidence also rose in South Australia (+8.8 per cent) and Western Australia (+4.1 per cent), while it was virtually unchanged in Victoria (+0.1 per cent). Meanwhile, a rise in new COVID cases in NSW on Saturday led to a decline in confidence of 5.5 per cent in the state, which substantially offset the overall index.”

• Four of the five key consumer sentiment sub-indexes rose last week, led higher by the consumer spending intentions gauge. In fact, consumer views on whether it is a good ‘time to buy a major household item’ rose by 2.2 per cent to a 5-month high of +16.8 points. Encouragingly for retailers, Aussie households appear willing to spend during the busy Christmas trading period.

• Also, the ANZ-Roy Morgan measure of consumer inflation expectations over the next two years eased from 4.9 per cent to 4.7 per cent last week. The Australian Institute of Petroleum yesterday reported that the national average unleaded petrol price fell by 5.1 cents last week – the biggest drop in 15 months – to 162.8 cents a litre, supporting consumer sentiment.

• The post-lockdown recovery in CBA credit and debit card spending data continues. But CBA economists reported that the pace of card spending moderated last week from elevated levels. In fact, card spending was 20.6 per cent higher in the week ending December 10, 2021 when compared to the corresponding week in 2019. But the growth rate in goods spending slowed to 23.7 per cent when compared to the corresponding week in 2019, below the 29.7 per cent pace a fortnight ago. The loss of momentum could be partly attributed to the timing of Black Friday sales.

What do you need to know?

Consumer sentiment – Week ended December 12

• The weekly ANZ-Roy Morgan consumer confidence rating rose by 0.5 per cent to 108 (long-run average since 1990 is 112.4). Four out of the five major sub-components rose last week.

CBA card spending data – Week ended December 10

• CBA economists said, “The latest CBA data for the week ending 10 December shows some pull back in recent spending momentum. The timing of the Black Friday to Cyber Monday sales period has likely played a part in the slowdown relative to 2019. Despite the pull back the pace of consumer spending remains at a fairly solid level, with card spending 20.6 per cent higher than the corresponding week in 2019. Card spending growth averaged around 25 per cent above 2019 levels in November as restrictions were eased and pent up demand was satisfied.”

• Also, “The pullback was across all states and territories and concentrated in goods, rather than services. Goods spending slowed to 23.7 per cent above the corresponding week in 2019, compared to 29.7 per cent a fortnight ago. A moderation in spend on clothing & footwear, general retail and household furnishings & equipment led the slowing. Services spending was broadly steady.”

Published by Ryan Felsman, Senior Economist, CommSec