Spending intentions across the country predictably fell during July, as Australian consumers geared up for a long, bloody battle with a renewed virus which has only gotten worse.
According to the Commonwealth Bank’s Household Spending Intentions data, July was the first time that year on year spending intentions have fallen across the majority of measured categories since the beginning of the pandemic – with only health and fitness spending boosted due to increased medical spend.
Throughout July, Sydney, South Australia and Melbourne entered lockdowns, with Prime Minister Scott Morrison stating at the time that there was no shortcut and that citizens just had to “hunker down and push through”.
These rolling lockdowns impacted spending intentions severely, according to CBA chief economist Stephen Halmarick.
“[Spending dropped] in July and, unfortunately, the spread of the delta variant of the COVID-19 virus has seen a combination of rolling lockdowns used across much of Australia including an extended lockdown in Greater Sydney,” Halmarick said.
“More recent CBA credit and debit card spending data shows the ongoing impact of lockdowns, with national spending to 13 August flat relative to 2020 and up just 4 per cent against the same week in 2019.”
The impact is so pronounced that CBA is expecting the Australian economy to contract 2.7 per cent per quarter in Q3, and revised its 2021 GDP growth forecast from 5 per cent to 3.6 per cent.
And while we won’t have retail trade data from the ABS for the period until the 27th August, its fair to assume spending data will also contract – as it did in June, when far less of the country was in lockdown.