The latest data from the Commonwealth Bank Household Spending Intentions (HSI) series released today shows the sharp increase in home buying intentions is continuing. Beyond housing, the overall picture is one of a gentle upturn in consumer spending intentions.
CBA’s Chief Economist Michael Blythe said: “The sharp upswing in home buying intentions continues and intentions are now approaching the record highs seen in early 2017.”
Current HSI readings are consistent with an ongoing increase in dwelling prices and a bottoming out in residential construction activity.
“The ongoing improvement in the home buying intentions series indicates that the low point for residential building construction will probably be around mid 2020,” he added.
Mr Blythe said retail spending intentions show a modest improvement is in place.
“After a poor September, there was a small pick-up in retail spending intentions data in October,” Mr Blythe said.
“The latest edition of the Commonwealth Bank HSI series, which incorporates data to the end of October, supports the RBA’s view that the economy has reached a ‘gentle turning point’. But the improvement is quite modest given the size of tax rebates and interest rate cuts delivered in recent months,” Mr Blythe said.
“By fuelling fears about the economic outlook, rate cuts are probably blunting some of the potential boost from tax rebates and rising house prices,” he added.
The HSI series offers a forward-looking view by analysing actual customer behaviour from CBA’s transactions data, along with household spending intentions from Google Trends searches. This combination adds to insights on prospective household spending trends in the Australian economy.
Mr Blythe points out that trends in some non-retail spending look reasonably encouraging.
“Travel spending intentions are increasing, albeit from low levels. Entertainment spending intentions are rising again. And education spending intentions are high and rising,” Mr Blythe said.
“Health and fitness spending intentions have, however, levelled out, while the recent slight improvement in motor vehicle purchase intentions from deeply negative territory has now stalled," he added.
Household Spending Intentions – October 2019
CBA obtains an early indication of spending trends across seven key household sectors in Australia. Apart from home buying, the series covers around 55 per cent of Australia’s total consumer spend across; retail, travel, education, entertainment, motor vehicles, and health and fitness.
|Retail Spending Intentions|
|Travel Spending Intentions|
|Home Buying Spending Intentions|
|Education Spending Intentions|
|Entertainment Spending Intentions|
|Motor Vehicles Spending Intentions|
|Health & Fitness Spending Intentions|
To find out more about CBA’s Household Spending Intentions Series, visit www.commbank.com.au/spendingintentions.
Notes for Editors:
About the approach
The new approach focuses on Australian households and their spending intentions. Employing near real-time spending readings from CBA’s household transactions data and combining them with relevant search information from Google Trends was used to map the data results on consumer spending.
About Google Trends
Google Trends is a publically available service that enables people to explore search trends around the world. These searches provide insights into what consumers are doing/researching on the Internet and what their spending intentions are.
CBA’s Household Spending Intentions series is published on the third Tuesday of every month.
Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945.