Household spending rises despite Omicron push
Household spending has soared after a drop during Omicron – but there are some things Aussies can’t live without.
Household spending was surprisingly high at the start of 2022, despite the massive spike in Omicron cases across the country, research from a major bank has found.
The latest index of household spending intentions from the Commonwealth Bank shows an overall fall of 10% in January compared to the previous month, led by entertainment, retail (both down almost 21%) and the household services (down 14.4%).
Being the post-Christmas period, this is usually the month when a drop is observed.
But the overall index was remarkably 1.4% higher than the same period last year.
The data is drawn from the ABC’s internally generated transaction and loan data, as well as publicly available Google search terms, covering 12 spending categories and providing fascinating insight into what Australians spend on what they have won hard.
The bank’s chief economist, Stephen Halmarick, said it’s worth noting that what looked like a sharp drop in the retail trade index last month was actually less than the average January drop since 2017 – suggesting that the impact of the highly infectious variant of Covid was less significant than might have been expected.
And the retail trade index rose 4.4% on the year, “confirming our view that the consumer-led recovery remains intact,” Halmarick said.
Department stores, electronics, hardware, pet supplies, women’s accessories, florists “and, very interestingly, gifts and souvenirs” led the growth, he said. he declares.
Duty free resumed from a very low base as international travel resumed, and tailoring and alterations were also popular, a trend seen throughout the festive season.
Spending on packaged alcohol, discount and variety stores, camera and photography supplies, art supplies, stationery and antique stores was weaker.
The research also showed that the index of home purchase spending intentions fell another 13.8% in January compared to December and is now more than 27.3% lower during of the year.
“This confirms our view that, after rising 22% in 2021, house prices are expected to rise a more modest 7% in 2022 before adjusting to the 10% decline projected in 2023,” said Mr Halmarick.
House price growth could even be below 7% this year given the earlier than expected Reserve Bank of Australia rate hike, now widely expected in August, he said.
It comes after the National Australia Bank last week predicted a 3% rise in house values in 2022 and a decline of around 10% next year.
Also on Tuesday, the weekly ANZ-Roy Morgan consumer confidence rating dipped a hair into pessimistic territory, with sentiment falling the most in Western Australia as Omicron cases spiked and bushfires ravaged the region. of the State’s Wheatbelt.
But the main measure of consumer spending intentions continued to rise, with the “time to buy a major household item” sub-index rising 0.7% last week.
“More recent data from the ABC on credit and debit cards suggests consumer spending is now picking up,” said CommSec senior economist Ryan Felsman.
Another new survey, carried out by NAB, showed that business conditions fell in January, but confidence proved resilient in all sectors except mining, signaling that companies were optimistic. that the Omicron epidemic would be short-lived.