The CommBank Household Spending Intentions Index (HSI) increased by 3.1% in May to 117.9.
The strength in May was a partial reversal of the 4.2% fall in April due to fewer trading days.
The data shows the boost in May was led by a seasonal increase in the health and fitness (14.9%), home buying (14.4%), and transport (9.6%) sectors.
Continued growth in public transport spending reflected more employees returning to the office and saving money on petrol and parking costs by leaving the car at home.
Demand for childcare services also rose as cost of living pressures and female workforce participation, particularly in full time work, lifted over the past year.
A change in subsidies from 1 July 2023 should lower out of pocket expenses.
ABS labour account data revealed the number of multiple job-holders in Australia increased to 947,000 in the March quarter, a 2.1% increase since the December quarter.
ABS Head of Labour Statistics Bjorn Jarvis said this is the highest the multiple job-holding rate has been since 1994.
“It means that around one in fifteen people now have more than one job,” Mr Jarvis said,
CommBank Senior Economist Belinda Allen said a decline in the HSI index’s annual growth rate to 4.7% and below inflation of 6.8% suggests real spending is falling.
“There was a real drop in discretionary spending following its weakness over recent months, with falls in travel and entertainment spending in May and both categories tracking lower than this time last year,” Ms Allen said.
“Consumer spending is generally weak and we expect it will slow further given the RBA’s interest rate rises and with more on the horizon.
"We’re seeing signs of people cutting spending where they can.”
CommBank anticipates the RBA to lift the cash rate in August, with a risk the next hike could be as early as July.
|Spending Category||Monthly change %||Yearly change %|
|Health and fitness||+14.9%||-0.7%|
|Communications and digital streaming||0%||+1.9%|
Source: CommBank Household Spending Intentions Index May 2023
Consumer sentiment steadies ever so slightly
The Westpac-Melbourne Institute Consumer Confidence Index rose 0.2% in June to 79.2.
The survey was taken over the period that covered the June decision by the RBA to lift the cash rate by 25 basis points to 4.1%.
While the full survey showed little net change in sentiment, responses within the survey week show a big rate rise impact.
Prior to the announcement of the rate hike decision confidence had lifted sharply from 79.0 in May to 89.0 - following the announcement it tumbled to an extremely low 72.6.
Westpac Chief Economist Bill Evans said inflation remains the dominant drag on confidence, well ahead of rates.
“The Index has now held at ‘recession lows’ for the last year – a period in which inflation has consistently been the dominant news story,” Mr Evans said.
“News on inflation is assessed as by far the most negative issue; followed by interest rates; while assessments of economic conditions; employment and the Budget show significant improvements relative to the last read on consumer news recall back in March.”
The monthly annualised inflation rate currently sits at 6.8% in April.
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