Movie-goers, bargain hunters boost discretionary spend

January 10

Witches, warriors and a feisty Polynesian teenager have contributed to the growth in discretionary spending across the nation.

High-profile movie releases, along with Black Friday promotions and discounting, helped drive the 0.4 per cent increase in discretionary spending in November, in the Australian Bureau of Statistics’ monthly household spending indicator.

As well as extra spending on clothing and footwear and household equipment and furnishings, new car purchases were also strong, especially for SUVs.

“Black Friday boosted sales in recreation and culture by 0.9 per cent, making it the largest contributor to overall spending growth,” ABS head of business statistics Robert Ewing said.

“Spending in cinemas continued to grow strongly, with major releases such as Wicked, Gladiator II and Moana 2 all opening in November.”

Overall spending rose 0.4 per cent in November, a smaller rise than the 0.9 per cent increase in October.

In September, the indicator fell 0.2 per cent.

While still experimental, the household spending indicator covers a wide range of spending areas, drawing on bank card transactions, supermarket payments and new vehicle sales figures.

Consumer activity has been a source of uncertainty for Australia’s central bank in its fight against inflation.

While spending momentum has been picking up, Commonwealth Bank economist Harry Ottley said this was to be expected given real household disposable incomes were finally increasing and interest rate cuts were approaching.

“In our view, the increase in household consumption to this point has been muted and does not pose a risk to our view of interest rate cuts in the near term,” he wrote following the release of Thursday’s retail sales figures.

CBA is tipping a February start to interest rate cuts, a view now shared by ANZ.

ANZ economists revised their call for easing to commence following Wednesday’s monthly inflation readout.

Its updated forecasts now have the all-important December quarter annual trimmed mean at 3.2 per cent, below the RBA’s forecast of 3.4 per cent.

“We think this will be enough for the RBA to cut the cash rate by 25bp at its February meeting, rather than waiting until May,” ANZ Head of Australian economics Adam Boyton and his colleagues wrote in a note.

Yet they warned a hold was still on the table if the RBA put more emphasis on persistent tightness in the labour market.

“But the sharper-than-expected slowdown in wage growth in 2024 and weaker inflation forecast for December quarter suggest an unemployment rate at or just below four per cent may be consistent with underlying inflation in the band.”

Markets were pricing in around a 75 per cent chance of a February cut on Friday.

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