The latest in the Commonwealth Bank’s housing spending intention (HSI) series showed buying intention for motor vehicles turned higher, while the impact of bushfires and coronavirus has already impacted Australians' intentions to travel.
CBA chief economist Michael Blythe said the gap between consumer spending intentions and home buying intentions still persists in 2020.
“While the headline home buying intentions data eased back a little in January, the solid upward trend remains in place and there are now more signs this improvement may translate into stronger motor vehicle spending intentions – off a very low base,” he said.
The results showed buying intentions for motor vehicles have turned decisively higher, with the improving trend significant because it is the most sensitive to changes in wealth.
Consumers are also looking to spend more money on entertainment, with intentions rising, but the levelling out would again be consistent with some negative impact from the fires and virus.
However, it is not all good news for the Australian economy, with Mr Blythe highlighting HSI measures are mixed but on the soft side overall, with bushfires and coronavirus having a potential negative impact.
“There are clear signs of a turn down in education spending intentions and, especially, travel spending intentions,” he said.
Early signs of an uptrend in travel spending intentions have evaporated and a clear step down is now evident.
The retail sector is again expected to struggle over the short term, according to CommBank.
Retail spending intentions, which are zig-zagging, remain effectively flat. There are indications that household preferences are to take the benefit of interest rate cuts and tax rebates and use it to strengthen personal balance sheets.
This could ultimately encourage more spending at the retail level, but has the consequence of long and variable lag that is underlying monetary policy.
About the author
