In this podcast, NAB Chief Economist, Alan Oster gives you a 10 minute summary of our analysis of consumer spending.
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NAB Chief Economist, Alan Oster commented
- Due to the end of financial year and some unexpected results, we have brought forward our fortnightly data insights report one week. While much of the economic news has been gloomy of late, consumers seem to have shrugged this off, at least for now, spending big on EOFY sales. Business inflows were even stronger than our headline consumer figures.
- Our latest weekly consumer tracking data to 2 July captures the full EOFY impact, with a bigger than normal boom in spending almost across the board, combined with very strong business inflows. While it is normal to see strong EOFY results as businesses finalize transactions and consumers enjoy traditional sales, these results are stronger than usual. Consumption was up 11.6% before revisions and 3.5% after revisions to prior weeks’ data. All states except NT and Tasmania gained, with Victoria and New South Wales leading.
- Overall, our seasonally adjusted consumption series stood at 154.1 for the week ending 2 July 2022, using a 2019 base. This was well up on the week prior (148.4) and even more so before accounting for data revisions (138.0). Retail stood at 146.2, up from 144.6 the week prior but substantially before revisions were applied. Hospitality eased slightly from 148.9 a week prior to 148.4, but stands at a record level on a four-week moving average basis.
- Business credits surged after a mixed week the week prior, led by very strong results in Victoria and New South Wales. Gains were broad based last week, but results were especially strong in mining, manufacturing, hospitality and construction (with the latter an ongoing surprise given well publicized issues in the sector). That said health and education continue to lag.
- It remains to be seen whether this encouraging trend can continue. The RBA has hiked rates 50bp at each of the last two meetings and we expect another 50bp rise next month. Meanwhile, global economic headwinds continue to mount. While we still expect a soft landing for the Australian economy, growth is likely to be lower next year – around 2%. This is not consistent with a consumer sector running this hot.
- As this week brings forward our consumption report, our next public release will occur on 21 July. Our cashless retail sales and June monthly business survey will be released next week, providing further detail on the state of retail sales and the confidence of retail businesses.
For further details please see NAB Data Insights (week ending 2 July 2022)