Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Household spending is set to take off, particularly on travel, as coronavirus restrictions ease in the nation’s major states and its capital.
Commonwealth Bank of Australia’s household spending intentions index rose 6.6 per cent in October, to be 4.4 per cent higher than a year earlier, with travel soaring by 52.7 per cent in the month.
“After months of restrictions, Australians are finally free to spend again,” CBA chief economist Stephen Halmarick said.
“The strong index reading for October underscores pent-up demand across the economy, particularly for lockdown-affected sectors such as travel, transport and household services.”
The revamped index has expanded to 12 categories covering almost all consumer spending and is backed by the bank’s transaction and loan application data covering 2.5 million households. It also uses publicly available Google Trends search activity.
The report’s release coincided with the weekly ANZ-Roy Morgan consumer confidence index – another pointer to future household spending – which rose 0.6 per cent, the eighth gain in nine weeks, albeit with mixed results across the states.
“Since its recent low in early August, consumer confidence is up a touch over 10 per cent and is getting close to its long-run average,” ANZ head of Australian economics David Plank said.
These outcomes support Deloitte’s annual retailers Christmas survey, which found 80 per cent of retailers are expecting to see sales grow this holiday period, to be about 20 percentage points higher than in 2020.
“As the vaccine-led reopening and recovery takes hold and retailers welcome cashed-up customers back to their stores, they finally feel they have something to be optimistic about,” Deloitte’s David White said.
However, retailers still face some challenges with more than half concerned about receiving sufficient stock for Christmas and nearly three-quarters worried that rising shipping costs will pressure their margins.
“Global supply chains have come under pressure as the world’s consumers emerge from the pandemic, and Australia is not immune from the fallout,” Mr White said.
National Australia Bank’s business confidence index, also released on Tuesday, jumped 11 points to an index of 21 points.
“Confidence began to rebound last month as reopening plans were announced, and that continued in October as businesses saw those plans begin to become a reality,” NAB chief economist Alan Oster said.
NAB’s business conditions index also rose six points in October to 11 index points, rising back above its long-run average and with all its components rebounding.
“Conditions have held up fairly well through the lockdown period, but the resilience of businesses was beginning to wear thin in September,” Mr Oster said.
“So it is pleasing to see a quick rebound in NSW with restrictions mostly lifted.”
He said there is still scope for things to improve further in coming months, particularly in Victoria, but overall it was an encouraging result.
A large improvement in forward orders provided further evidence that a strong rebound in economic activity is underway.