Australian Bureau of Statistics (ABS) data showed that household spending is slowing, as ANZ and Roy Morgan report an all-time low in consumer confidence.
Household spending was 1.8 per cent higher compared to June last year, ABS data revealed, with head of labour statistics Ben Dorber calling it the slowest growth in household spending since February 2021.
“Spending on discretionary goods and services was down for the third straight month, falling 0.7 per cent over the year, as households adjust to cost of living pressures,” Dorber said.
“Non-discretionary spending rose 4.2 per cent, however, the growth rate has been slowing since January, when it reached 21.0 per cent.”
Despite the overall lift, clothing, footwear and accessories saw the largest drop in household spending by 7.1 per cent in June. This followed a 3.4 per cent drop in May and and 1.8 per cent drop in April.
Goods spending saw its largest decline since July 2021 with a 1.2 per cent fall, while spending on Services rose 4.6 per cent.
The overall growth in household spending compared to June last year was driven by Miscellaneous goods and services at 8.4 per cent, which includes spending on child care, legal services and personal care. Health (6.2 per cent) and food (5.0 per cent) had the next largest spending growth rates in June.
Household spending increased in most states and territories in June 2023 compared to June 2022, with only the Northern Territory seeing a fall in spending over this period.
The latest news on household spending came as ANZ-Roy Morgan consumer confidence dipped 3.4pts to 75 this week, fully erasing the gains of last week.
The index has now spent a record 23 straight weeks below the mark of 80, beating the all-time record of five months (22 weeks) from September 1990 – January 1991 when the index was conducted on a monthly basis.
Consumer confidence is now 5.3pts below the same week a year ago and 3.2pts below the 2023 weekly average of 78.2. It was also down in all five mainland states across Australia.
Driving the index down this week were decreases in sentiment regarding personal finances both compared to a year ago and expectations over the next year, ANZ and Roy Morgan reported.
Now, 17% (down 3ppts) say their families are ‘better off’ financially than this time last year compared to a new record high majority of 57% (up 4ppts) that say their families are ‘worse off’ financially.
Just over a quarter of Australians (28% - down 5ppts) expect their family to be ‘better off’ financially this time next year while 38% (up 4ppts) expect to be ‘worse off’.
Looking further ahead, 11% (up 1ppt) of Australians expect ‘good times’ for the economy over the next five years compared to just under a fifth (19% - down 1ppt) expecting ‘bad times’.
Meanwhile, 19% (down 2ppts) of Australians now say it is a ‘good time to buy’ major household items while 54% (unchanged) say now is a ‘bad time to buy’.
“ANZ-Roy Morgan Australian Consumer Confidence declined last week, despite the RBA decision to keep the cash rate on hold,” ANZ senior economist Adelaide Timbrell said. “Homeowners with debt still have far lower confidence than other cohorts, as restrictive interest rates squeeze cashflows of indebted households.
“WA ended the week with the highest average confidence while QLD had the lowest.
“Average confidence fell among all the housing cohorts, but the biggest fall was among renters (-9.4pts) after a jump in the previous week.”