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Spending survives fiscal cliff. For now…

National ANZ-observed spending growth was +4.3 per cent year-on-year for the week to October 10, including −16 per cent year-on-year in Victoria and +9 per cent year-on-year average elsewhere.

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There isn’t any evidence from the data the reductions in JobKeeper and JobSeeker are hitting spending - yet. This is the key risk to spending in the short term. On the upside, spending data in Victoria suggest some pent-up demand could give spending a boost once restrictions in Melbourne ease.

"Social distancing hasn’t stopped people from sharing the love. Personal postage spending was up 22 per cent year-on-year for the week to 10 October.”

Spending less on clothes or paying later? For the week to October 10, ANZ-observed spending on clothing (−12 per cent year-on-year) and beauty services (−6 per cent year-on-year) were still lower than last year but spending growth on payment gateways, including Buy Now Pay Later, and secure third-party portals was up 38 per cent year-on-year. 

We are slowing down on home upgrades. Furniture is up 16 per cent year-on-year for the week to October 10, down from +65 per cent year-on-year at its mid-May peak. Trade services grew 23 per cent year-on-year, down from a +130 per cent year-on-year peak in late April. Hardware grew 18 per cent year-on-year.

The focus on technology has moved from hardware to software. Electronics spending is below pre-pandemic growth at +5 per cent year-on-year and office retailer is barely growing (+6 per cent year-on-year). Meanwhile, software spending is up 21 per cent year-on-year and miscellaneous entertainment including streaming is growing stronger than pre-pandemic (+10 per cent year-on-year).

Social distancing hasn’t stopped people from sharing the love. Personal postage spending was up 22 per cent year-on-year for the week to 10 October and had a Father’s Day spike in early September (46 per cent year-on-year for the week to 6 September).

Spending at pet stores (including pet supply stores) was up 35 per cent year-on-year and pet services growth (+45 per cent year-on-year) has also accelerated over recent months.

Accommodation (−26 per cent year-on-year) and dining/takeaway (−5 per cent) spending have both been trending up over the last couple of months and entertainment venue spending (−48 per cent year-on-year) improved across September from its July and August stagnation. Cinemas are still struggling (−78 per cent year-on-year).

Retail growth (+6 per cent year-on-year) has looked steady since early September but weak spending in Victoria across shopping (−31 per cent year-on-year) and dining/takeaway (−52 per cent year-on-year) suggests potential for a lift once restrictions in Melbourne ease.

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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