Biggest lift in consumer confidence in 22 weeks

Biggest lift in consumer confidence in 22 weeks

Consumer confidence; CBA card spending; Overseas arrivals & departures

What happened? The weekly ANZ-Roy Morgan consumer confidence rating rose by 3.1 per cent – the most in 22 weeks – to an 8-week high of 103.1 (long-run average 112.5 since 1990). Sentiment surged 10.6 per cent in Sydney and lifted by 6.2 per cent in Victoria, but was down 3.2 per cent in Queensland.

Commonwealth Bank (CBA) Group economists reported that national household credit and debit card spending for the week ended September 10, 2021 was “tracking 8 per cent higher than the corresponding week in 2019, similar to the 9 per cent pace recorded the week earlier, although up from 5 per cent recorded in the week ending 27 August.”

Implications: CBA Group economists estimate that Aussies have accrued $155 billion in excess savings over and above what they would normally save during the pandemic. By the end of 2021, this is likely to exceed $200 billion, or 10 per cent of gross domestic product (GDP). Consumer spending, once lockdowns end in NSW, Victoria and the ACT, could lift sharply as confidence improves when government restrictions are eased.

Other economic data: There were 74,860 overseas arrivals in July and 87,020 overseas departures.

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

What does it mean?

• Consumer confidence, as measured by ANZ and Roy Morgan, jumped by 3.1 per cent last week – the most in 22 weeks – to a two-month high. Sentiment in Sydney rebounded by 10.6 per cent as the NSW government released its ‘roadmap’ out of lockdown with hopes for an easing of restrictions in October. And despite increasing Covid-19 case numbers in Melbourne, confidence lifted by 6.2 per cent in Victoria as restrictions were wound-back in regional parts of the state. But sentiment deteriorated in Queensland (down 3.2 per cent) as new virus cases emerged.

• Consumer concerns about the rising cost of living eased, but remained elevated. The ANZ/Roy Morgan measure of consumer inflation expectations over the next two years fell to 4.5 per cent last week after hitting a 33-month high of 4.7 per cent in the previous week. But petrol prices have been in the news this week, hitting 20-month highs, so expect these concerns to potentially show up in next week’s survey.

• Encouragingly, consumer views on ‘current financial conditions’ (up 2.0 per cent) and ‘current economic conditions’ (up 6.8 per cent) improved last week, despite mounting job losses and financial hardship, due to extended lockdowns in Sydney, Melbourne and the ACT.

• And the closely-followed question of whether it is a good ‘time to buy a major household’ jumped by 4.2 per cent last week, implying an increased willingness by consumers to part with their hard-earned coin and amassed pandemic savings.

• Commonwealth Bank (CBA) Group economists reported that national credit and debit card spending was steady last week, “tracking 8.0 per cent higher than the corresponding week in 2019, similar to the 9.0 per cent pace recorded the week earlier.”

• Spending in the “Covid-free” states remains solid, despite lockdowns elsewhere, with “Tasmania, Western Australia, Queensland and South Australia continuing to record growth in card spending in excess of 20.0 per cent compared to 2019 levels.”

• But CBA economists cautioned that, “Card spending in NSW is just 1.0 per cent higher than levels in 2019 and Victoria is around 1.0 per cent lower than 2019 levels. The ACT continues to be significantly impacted from its lockdown with card spending 12.0 per cent below 2019 levels for the week ending 10 September.”

• The Federal Government announced plans today to develop a digital border pass to show the vaccination status of travellers in the first step towards re-opening Australia’s international borders. In July, just 74,860 people arrived in Australia from overseas with 4,750 overseas workers granted permanent skilled and temporary work visas. Provisional numbers for August show an even lower 3,290 work visas being granted. Already a lack of overseas workers is weighing heavily on Australia’s undermanned agricultural-facing sectors as they begin the winter harvest.

What do you need to know?

Consumer sentiment – Week ended September 12

• The weekly ANZ-Roy Morgan consumer confidence rating rose by 3.1 per cent – the most in 22 weeks – to an 8-week high of 103.1 (long-run average since 1990 is 112.5). Four out of the five major sub-components rose last week.

CBA weekly household card spending – Week ended September 10

• CBA Group economists reported that, “national household credit and debit card spending for the week ended September 10, 2021 “tracking 8.0 per cent higher than the corresponding week in 2019, similar to the 9.0 per cent pace recorded the week earlier, although up from 5.0 per cent recorded in the week ending 27 August.”

• And, “Card spending in NSW is just 1.0 per cent higher than levels in 2019 and Vic is around 1.0 per cent lower than 2019 levels. The ACT continues to be significantly impacted from its lockdown with card spending 12.0 per cent below 2019 levels for the week ending 10 September. There remains limited signs of spillovers to the other states with Tasmania, Western Australia, Queensland and South Australia continuing to record growth in card spending in excess of 20 per cent compared to 2019 levels.”

Overseas arrivals & departures – July

• In original terms, overseas visitor arrivals stood at 74,860 in July, down from 102,480 in June. Provisionally there were 28,680 arrivals in August, a 6-month low. Of the 74,860 arrivals in July, 49,510 were returning Aussie residents.

• In original terms, overseas visitor departures stood at 87,020 in July, down from 98,350 in June. Provisionally there were 38,640 departures in August, a 4-month low. Of the total departures in July, 50,170 were departing Aussie residents.

Published by Ryan Felsman, Senior Economist, CommSec