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Consumer spending set to boost economic recovery

  • April 21 2021
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Invest

Consumer spending set to boost economic recovery

By Cameron Micallef
April 21 2021

Australia’s recovery from the COVID-19 downturn looks to be buoyed by a wave of consumer spending, as Aussies increase their spending habits post-lockdown restrictions, new studies have revealed. 

Consumer spending set to boost economic recovery

Consumer spending set to boost economic recovery

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  • April 21 2021
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Australia’s recovery from the COVID-19 downturn looks to be buoyed by a wave of consumer spending, as Aussies increase their spending habits post-lockdown restrictions, new studies have revealed. 

Consumer spending set to boost economic recovery

In a leading indicator of stronger economic spending, Commonwealth Bank’s latest Household Spending Intention Series showed that Aussies are intending to spend more on travel, entertainment and home buying.

The stronger spending intentions data aligns with CBA economists’ forecast for the Australian economy to reach pre-pandemic growth levels by the first quarter of 2021.

CBA economists now forecast GDP to expand by 4.7 per cent in 2021, while the unemployment rate is seen declining to 5.0 per cent.

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“The stronger Household Spending Intentions report is another signal that Australia’s economic recovery is ongoing,” said CBA chief economist Stephen Halmarick.

Travel spending intentions posted the strongest year-on-year improvement among all seven categories in CBA’s Household Spending Intention series.

Mr Halmarick opined that the increase is partly driven by stronger travel-related spending and partly due to the collapse in spending recorded in March last year.

“The travel sector was among the hardest hit by the onset of the COVID pandemic, with border closures and a countrywide lockdown stifling nearly all travel-related activity,” Mr Halmarick said. “This month’s data, while distorted by base effects, still demonstrates how far the sector has recovered since last year.”

While separate data released by buy now, pay later (BNPL) service provider Zip Co showed strong indications of Australians consumers travel plans.

Zip’s data showed that spending on scuba diving equipment nearly tripled from last year (up 283 per cent), while spending on caravans and parachuting was up 179 and 120 per cent, respectively.

Zip Co’s co-founder and CEO Peter Gray noted that the data showed Australians are looking inward for their next holiday.

“Zip’s data shows that while people couldn’t get overseas this summer, it hasn’t stopped them getting out of the house,” Mr Gray said.

“Caravan dealers are selling over double from this time last year, and scuba-diving spend is almost four times what it was. While the local tourism industry is still missing the international dollar, our data shows Aussies are out there driving, diving and jumping in to support them.”

While spending on travel improved greatly, the economic recovery is not hitting all sectors, with consumer retail spending intentions falling over the month. 

While the retail sector had been a standout in March 2020, as actual spending and spending intentions surged during the early stages of the pandemic, retail spending and spending intentions growth had stabilised in recent months.

“Retail sales were the outperformer last year as everybody rushed to the shops to buy their canned goods and toilet paper, so the comparisons to last year underplay the strength of the sector and the continued economic rebound,” Mr Halmarick concluded. 

Consumer spending set to boost economic recovery
Consumer spending set to boost economic recovery
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

author image
Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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