Household spending grew 0.3% in June, EOFY sales underperform: CBA
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The news: Australian household spending grew by 0.3% in June but end-of-financial-year sales failed to drive the expected spending spree amid high interest rates, according to the Commonwealth Bank’s latest household spending index data.
The numbers: Household spending lifted 0.3% in June, up from the 0.2% growth in May, but the bank’s economists said the data hinted at a wider pullback from consumers due.
Retail spending lifted 0.2%, down from the 0.6% growth in May. Meanwhile, seasonally adjusted recreation spending slowed to 0.2% in June from 2.3% in May.
Hospitality spending rose 0.1% in June, down from the 0.9% growth in May.
Spending growth on utilities (1.4%) and education (1.1%) was the fastest due to seasonal trends, the ending of government rebates and the timing of university payments.
The context: Consumer spending has been weighed down by the US-Iran war, the downturn in the housing market and higher interest rates, according to Commonwealth Bank head of Australian economics Belinda Allen.
Recreational spending was hit by lower spending at “ski resorts, camping stores, museums and galleries and tour operators”, although this was partly due to poor weather at the start of the ski season.
The pullback in spending was led by Australians aged 18-24, while regional spending growth outpaced metropolitan areas.
What they said: “The softening we are seeing in the CommBank HSI is broadly in line with our expectation that household spending will slow over the remainder of this year,” Allen said.
“Slower household income growth together with the ‘wealth effect’ from a downturn in the housing market is expected to weigh on spending. However, consumers may dip into their savings buffers which would see spending slow less than we expect.
“The last three months has seen some volatile moves in the HSI due to the up and down of petrol prices, seasonality around payments of bills for education and utilities as well the timing of sales.”
The source: CBA Household Spending Insights June
