- 'Spending intent' is a leading indicator for the economy
- It fell across most categories in July 2021, including home buying
- Some categories - including home buying - are still above July 2019
Continued and expanding lockdowns across Australia are already affecting consumer spending intentions, according to the latest research from the Commonwealth Bank (CBA).
‘Spending intent’ is a leading indicator for the economy, as it tries to describe the mood of consumers, whose spending makes up 60% of GDP (which measures the size of the Australian economy.)
In CBA’s July 2021 ‘Housing and Spending Index’, consumers’ intention to spend was down across all categories as compared to a year earlier, including home buying.
Retail, education, entertainment, travel and motor vehicles were also down. The only exception was health and fitness, which was up.
It was all going so well…
Another bright spot among the declines was that, although down in July 2021, spending intent was higher for home buying, retail, entertainment and health/fitness than July 2019, before the pandemic.
“Australia’s economic recovery from last year’s COVID restrictions was impressive, as reflected by the sectors of the economy covered by the HSI series.
“However, this changed in July and, unfortunately, the spread of the delta variant of the COVID-19 virus has seen a combination of rolling lockdowns used across much of Australia including an extended lockdown in Greater Sydney.”
Stephen Halmarick, CBA Chief Economist
“More recent CBA credit and debit card spending data shows the ongoing impact of lockdowns, with national spending to 13 August flat relative to 2020 and up just 4 per cent against the same week in 2019. This supports our view that the Australian economy will contract by 2.7 per cent/qtr in Q3 21 and a revision of our 2021 GDP growth forecast to 3.6 per cent from 5 per cent.”
Google searches and CBA transactions are used to compile the HSI series.