Future outlook enhanced by Google Trends

The monthly Commonwealth Bank Household Spending Intentions (HSI) series, data to end-November, shows a very modest response to the policy stimulus, both monetary and fiscal, that has been applied to the economy through 2019. The weakness in the HSI indicators is centred on spending on ‘goods’, which continues to track sideways at low levels. In contrast, spending on ‘experiences’ is generally trending higher. Data for November showed a pause in the sharp upward trend in Home Buying intentions, but still at high levels. Retail sales spending intentions are bouncing around at low levels – with the recent increase in disposable income finding its way into savings, rather than spending. Travel and Entertainment spending intentions continue to improve slowly – as do Motor Vehicle spending intentions from a low base. Both Health & Fitness and Education spending intentions have turned down recently.

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Knowing what’s around the corner can keep you one step ahead.  

Whether you are running a business, a policy maker, an investor or one of Australia’s corporate enterprises - insights on shifting consumer spending intentions are critical in planning for the future. Our Household Spending Intentions series combines our spending data, one of Australia’s largest financial data sources, with Google Trends publically available search activity. By connecting actual spending data to intentional data, our analysis provides an early indication of prospective spending trends across seven key sectors.  This series covers about 55% of the total household spend. Future releases will look to expand our coverage to the remaining spending components.

Home Buying
Spending Intentions

  • There was a pause in the sharp uptrend in home buying intentions in November
  • Nevertheless, the home buying HSI remains close to the record highs seen in H1 2017
  • And HSI readings point to an ongoing pick up in dwelling prices

Retail
Spending Intentions

  • Retail spending intentions are bouncing around at present but seem stuck below the zero line.  Intentions are yet to deliver the decisive break that would signal better times for consumer activity and the economy more broadly
  • Tax cuts have improved household ability of spend. But the boost to disposable income has ended up in cash savings
  • One potential trigger for unlocking these savings would be a positive wealth effect from rising dwelling prices
  • The retail HSI tends to follow dwelling prices with a two-month lag

Motor Vehicles
Spending Intentions

  • Motor vehicle purchase intentions are little changed – they remain deep in negative territory
  • As with retail spending intentions, however, the turn in dwelling prices is generating a positive wealth effect that should eventually help lift spending intentions

Entertainment
Spending Intentions

  • Entertainment spending intentions are rising quickly after a lengthy period where spending intentions were falling/flat

Travel
Spending Intentions

  • Travel spending intentions are inching higher but are yet to re-enter positive territory
  • The lower AUD may be discouraging offshore travel. The Q3 CPI showed that over the past year the cost of an overseas holiday has increased by 5.8% while domestic holiday costs are up only 0.7%

Education
Spending Intentions

  • Education spending intentions slowed a little in November but are essentially tracking sideways at an elevated rate of growth

Health and Fitness
Spending Intentions

  • Intentions to spend on health & fitness have levelled out
  • But the levelling is occurring at a solid rate of growth
  • The trends indicate households are willing to allocate scarce disposable income to driving health & fitness spending with little impact from the vagaries of the economic cycle

Enhanced by Google Trends

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