ANZ is reporting a huge decrease in early year spending across the country when compared to previous years. The caution in spending is a result of the significant spread of the Omicron variant of covid-19 especially in NSW where spending in the week to 2 January was 25 percent lower year-on-year.
However, ANZ Research senior economist Adelaide Timbrell emphasises the recent drop is nowhere near lockdown levels.
“I don’t think it’s cause for too much concern for the 2022 outlook of spending yet. The Omicron caution is something that’s going to develop and change quickly. The good signs for spending in 2022 are that people are shifting their spending online rather than just not spending altogether, particularly for discretionary categories like non-food retailing and dining,” says ANZ Research senior economist Adelaide Timbrell.
“We’ve also seen that in the 2021 retail data that Victorians actually had a much smaller impact from Delta lockdowns compared to people in NSW and the ACT, and I think that speaks to the fact that when people – whether it’s businesses or consumers – have more experience with lockdowns, it tends to mean that they have a smaller spending impact each time,” continued Ms. Timbrell.
The author of ANZ’s spending data wrap-up adds Victoria’s spending was down 19 percent and Queensland’s was down 17 percent, although the rest of the country was not hit as badly.
“But if this caution does continue and we do see people stay at home more due to Omicron or not spend as much on hospitality and other retailing, that may be something that has an impact. It is just too early to tell right now. There’s a big difference between staying home for New Year’s and an economic crash, and I think we’ve just got to really remember that when we look at this data,” says Adelaide Timbrell.
Adelaide Timbrell notes a rise of Black Friday spending has been at the expense of Boxing Day sales, which have been progressively declining over the last four years, down 6 percent in 2021 and 10 percent lower than the figures recorded in 2019.
“We expect Boxing Day sales to probably keep falling or not grow very much in the future as well. We’re not worried about seeing Boxing Day getting weaker. It’s not because people are spending less money or more worried about their cashflow. It’s just because a lot of people already made their purchases in the lead-up to Christmas,” says Adelaide Timbrell.
Spending decreased across the majority of retail categories in the week to Christmas Eve, except for spikes for jewellery which increased by 43 percent and furniture recording an increase of 22 percent, as well as increases for specialist sport stores, discount stores, pet stores and nail products.
“When it comes to furniture we’ve seen a really strong increase in end-of-year spending in that category for a few years, but particularly in the last two years, and that really comes down to the housing market. We’ve seen a little bit more buying and selling since Covid-19, a lot more increases in housing prices. And that’s something that’s given homeowners that confidence or a trigger to purchase more furniture. Low unemployment expectations help with that too they are a bigger ticket item. Jewellery in a sense is the same, they’re a lot more on the expensive side,” says Adelaide Timbrell.
“When we know people are willing to get out and about but aren’t necessarily spending on bigger ticket items, we tend to see clothing and dining do better. And then when people are really confident about their wealth, we tend to see things like furniture, jewellery, electronics and department stores do better,” says Adelaide Timbrell.
Job Adds Across Australia Dropped By 5.5 Percent in December 2021
Businesses across Australia chose to take to the labour market with caution during the month of December as job ads fell as a result of the rising case numbers, and the Omicron-induced economic uncertainty that accompanied them.
ANZ published the results of its monthly job ads index on Wednesday, which showed the rate of jobs in Australia dropped by 5.5 percent during the month of December from its revised 17.2 percent jump over the two months previous.
The bank suggested that a record gain in November’s employment figure, which saw 366,100 new jobs added to the economy, was likely a significant factor in December’s falling rate of job ads, which still sits 36.8 percent above pre-pandemic levels.
Catherine Birch, who works as a senior economist at ANZ, suggested that the decrease in job ads might not be all bad news, as the index could indicate that the number of listed vacancies filled outpaced the number of new jobs advertised.
“This seems to explain at least part of December’s ANZ Job Ads drop. A remarkable net 366,100 people found employment in November, a 2.9% month on month gain. While not directly comparable, the National Skills Commission’s Internet Vacancy Index recorded a 0.6% month on month rise in newly lodged job ads in November. But it’s also possible that businesses have become more hesitant to hire due to the spread of omicron and the consequent uncertainty around consumer behaviour and worker availability,” says Catherine Birch a senior economist at ANZ.
According to the data collected by the ANZ, consumer sentiment took a tumble after Christmas and Boxing Day trade. Like job vacancies, consumer sentiment also fell as a result of rising Omicron case numbers, the bank suggests.
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