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Where goes Victoria, so goes Australia

While the rest of Australia’s spending seems resilient, Victoria’s lockdown and the looming reduction of JobKeeper has caused a sharp deterioration in spending, hitting the national total.

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National ANZ-observed spending grew just 0.4 per cent year-on-year for the week to 15 August, the weakest result since the week to 17 May. Outside of Victoria, growth in total ANZ-observed spending was much stronger at +10 per cent year-on-year. In contrast, Victoria’s total spending was -27 per cent year-on-year.

"Despite the largely successful containment of the virus outside of Victoria, mobility and Google searching behaviour in other states have been negatively impacted, particularly NSW.”

Despite the largely successful containment of the virus outside of Victoria, activity, as measured by mobility and Google searching behaviour in other states, have been negatively impacted, particularly in New South Wales. Overall these data suggest the recovery in activity is slipping.

Of particular concern is optional travel (such as visitor numbers to retail and recreation venues) is now trending lower. 

This increasing caution shows up in social spending as well.

Nationally, dining and takeaway spending deteriorated to -12 per cent year-on-year for the week to 15 August (from -2 per cent year-on-year for the week to 15 July). Fashion spending, which is also linked to movement and socialising, was worse for the week to 15 August (-23 per cent) than the week to 15 July (-5 per cent).

ANZ data also show people are doing more of their spending online, with 24 per cent of non-food retailing occurring online (compared with a 12-13 per cent average in 2019).

Growth in online entertainment (+12 per cent year-on-year) and internet payment gateways including Buy Now Pay Later (+26 per cent year-on-year) are also higher than usual.

Confidence interstate or overseas travel restrictions will ease soon seems low, as Google searches for “cheap flights” fell again. Even local travel intentions appear to be backsliding after mostly recovering, with searches for Airbnb in different capital cities down.

Queensland’s recent decision to declare New South Wales and the ACT as hotspots has no doubt had an impact. Accommodation spending weakened to -43 per cent year-on-year for the week to 15 August, down from -36 per cent year-on-year for the week to 15 July.

As the reduction in JobKeeper and other fiscal stimulus looms, the downward trend in home-related spending is solidifying.

Consumer electronics spending was +37 per cent year-on-year for the week to 15 August, the weakest since mid-April, before JobKeeper. ANZ-observed spending at furniture (+32 per cent year-on-year), homewares (+13 per cent year-on-year), hardware (+17 per cent year-on-year) and department store (+16 per cent year-on-year) retailers also weakened – all at least 10 percentage points lower than growth to 15 July.

Adelaide Timbrell is Economist and Hayden Dimes is Rates Strategist at ANZ

Footnote: Decreased cash use inflates year-on-year growth in ANZ-observed spending, particularly across smaller ticket categories (e.g. groceries, dining).

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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