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Lockdown 2.0 slows spending gains

Melbourne’s return to stage 3 lockdown and the closure of the New South Wales-Victoria border has seen spending take a hit across the state.

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ANZ-observed spending in Melbourne fell 11.6 per cent year-on-year for the week to 18 July, while in Victoria it fell 7.1 per cent year-on-year.

"Despite lockdowns in Melbourne, spending nationally was relatively stable in July, but improvements in social and movement categories stalled.”

Spending in Melbourne on dining and takeaway (-52 per cent year-on-year) and fashion (-48 per cent year-on-year) deteriorated sharply as a result, as did accommodation spending in both Melbourne (-57 per cent year-on-year) and regional Victoria (-26 per cent year-on-year).

Despite lockdowns in Melbourne, spending nationally was relatively stable in July (+10.4 per cent year-on-year for the week to 18 July) but improvements in social and movement categories stalled. Retail growth remained the highlight of ANZ-observed spending (+25 per cent year-on-year).

There seems to be no slowdown in ANZ-observed household goods spending as electronics sales jumped back up past the +60 per cent year-on-year mark and other home enhancement categories such as furniture (+50 per cent year-on-year) and homewares (+30 per cent year-on-year) remained very elevated.

Nationally, dining and takeaway (-3.4 per cent year-on-year for the week to 18 July) and fashion (-1.4 per cent year-on-year) were back in negative territory as a result of Melbourne’s lockdown. Supermarket (+23 per cent year-on-year) and specialist food retailer spending (+30 per cent year-on-year) remained very strong.

Unlike during Lockdown 1.0 there is no evidence of “stockpiling” from supermarkets in Melbourne or elsewhere.

Travel spending improvements stalled as Melbourne’s situation worsened and some state borders closed. National accommodation spending growth was -37 per cent year-on-year for the week to 18 July, almost no improvement since mid-June (-38 per cent year-on-year for the week to 18 June) but better than mid-May (-69 per cent for the week to 18 May).

Decreased cash use since the start of the pandemic is likely to inflate the year-on-year growth rate of some categories of spending.

Adelaide Timbrell is Economist and David Plank is Head of Australian Economics at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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