Spending by Australian consumers strengthened last month despite reductions in emergency income support measures introduced at the onset of the pandemic, including the JobKeeper wage subsidy.
There were fears that cuts to JobKeeper and the coronavirus supplement for JobSeeker recipients made in late September would take a toll on the economy. But a national spending tracker shows consumer demand has been resilient, despite the lower level of government income support for households.
The tracker developed by analytics firm AlphaBeta, a part of Accenture, and credit bureau illion shows average spending per person returned to pre-pandemic levels for the first time in almost three months after strong gains in the fortnight ending October 25.
The last time spending was consistently above the pre-pandemic norm was in July when purchasing was artificially inflated by special stimulus payments and an influx of cash due to superannuation withdrawals.
AlphaBeta director Dr Andrew Charlton said the results were a sign that the tapering back of government support measures was not having a disastrous effect on the economy.
“Australians should be buoyed by the fact that spending is now back to pre-COVID levels across both essential and discretionary spending,” he said.
The spending tracker, which draws on the anonymised purchasing data of hundreds of thousands of consumers, showed discretionary and essential spending by high income earners returned to pre-COVID levels in mid-October for the first time since the pandemic began.
Simon Bligh, chief executive illion, said it was pleasing to see higher income earners “opening the purse strings again.”
Separate Commonwealth Bank credit and debit card data shows spending was 6 per cent higher than a year ago in the week ending October 30. Weekly spending improved strongly in Victoria amid the lifting of pandemic restrictions.
But Dr Charlton warned the withdrawal of financial support to households and businesses still posed an economic threat.
“There are definitely risks and headwinds,” he said.
In late September, JobKeeper, which supports about 3.5 million workers, was cut from $1500 to $1200 a fortnight for those who worked more than 20 hours a week and to $750 a fortnight for other employees. The $550-a-fortnight coronavirus supplement for those on JobSeeker and some other welfare payments fell to $250 a fortnight around the same time. JobKeeper will be reduced further in January and finish in March 2021.
The spending tracker shows food delivery remains the strongest spending category across Australia, with purchases 289 per cent higher than the pre-pandemic norm in the week ending October 25.
“Aussies love their MasterChef but are obviously leaving the cooking to someone else,” Mr Bligh said.
Other spending categories doing especially well include online gambling (weekly spending 94 per cent higher than pre-pandemic) and furniture and office (+68 per cent).
Spending at cafes, which fell sharply in the early stages of the coronavirus outbreak, was 10 per cent higher than pre-pandemic levels in the week ending October 25.
However, spending in some categories remains way below the pre-pandemic levels including public transport (-52 per cent), pubs and venues (-32 per cent), travel (-27 per cent) and road tolls (-22 per cent).
The increase in Melbourne’s travel limit to a 25 kilometre radius appears to have boosted spending at petrol stations which was 69 per cent higher in Victoria in the week ending October 25 compared with the pre-pandemic norm. But spending on entertainment Victoria was still 97 per cent below pre-pandemic levels.
In NSW, spending at fast food restaurants was 45 per cent above pre pandemic levels in the week to October 25. But purchases on travel were still 73 per cent below pre pandemic levels and entertainment spending was down 62 per cent.
Source: Thanks smh.com