CommSec senior economist Ryan Felsman said lockdowns and state border closures had pushed consumer spending in December lower than it might otherwise have been. “A ‘war chest’ of savings, estimated to be around $100bn, was amassed during the pandemic,” Mr Felsman said. “Despite this, government-imposed lockdowns pose a threat to consumer spending and confidence until vaccines are rolled out.”“CBA Group internal card spending and Household Spending Intentions data both show that customer spending pulled back in December. CBA Group economists are forecasting a 7.0 per cent drop in preliminary retail trade for December when the figures are released on Friday.”Despite a likely drop in retail spending, the bank’s Household Spending Intentions series for December of 2020 shows a growing intention to spend in certain areas such as travel, with Google searches and deposits paid for holidays ticking up. The largest jump in both spending and interest were for more traditional holidays like camper van, motorhome and camp ground jaunts, while spending on cruise ships, airline travel and travel agents remained depressed.December also saw “strong increases” in actual spending on new and used cars alongside an increase in applications for car loans. Increased demand for used vehicles and a constrained supply sent used car prices soaring by more than 30 per cent in 2020, and while new car sales had an overall subpar year, November was the first month in more than 30 to see a real year on year increase in sales.
Commonwealth Bank researchers said that demand for cars is likely to keep rising alongside the housing market, which is generally forecast to grow between 10 and 15 per cent in 2021.
“RBA research has shown that spending on motor vehicles generally has the highest response to changes in property prices,” the researches wrote.Interest in home buying was also strong in December, despite the bank saying home loan applications were tracking lower than November, which was a record month for mortgage originations.
But intention to spend in the retail sector dropped as lockdowns hit parts of the country, and Mr Felsman said this uncertain sentiment had carried over into January. “Credit and debit card spending dropped sharply with the annual pace of spending decelerating from a growth rate of 18.6 per cent for the week ended December 25, 2020 to 8.3 per cent in the week to January 15, 2021,” Mr Felsman said. “The hard three-day virus lockdown in Greater Brisbane beginning January 8 saw card spending plunge by 12.5 percentage points to an annual growth rate of 4.2 per cent last week.” “Annual in-store spending in the Sunshine State dropped a whopping 17.7 percentage points to -0.5 per cent over the week. “And virus flare ups in Greater Sydney and changing border restrictions saw spending down 3-4 percentage points across major states over the same week.”However, Mr Felsman did note that the ANZ-Roy Morgan Consumer Confidence index showed consumer sentiment in January was slightly higher than it was one year ago, at the peak of the Black Summer bushfires.“Consumers are proving to be resilient despite encountering disrupted summer holiday plans due to localised COVID-19 lockdowns and interstate border closures.”



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