There were five pieces of good news for businesses in the Australian Bureau of Statistics’ (ABS) most recent household spending data.
- household spending in June was 10.2% higher than the year before.
- spending increased in all states and territories on an annualised basis.
- it also increased in all nine spending categories monitored by the ABS
- the categories most impacted by covid (transport; hotels, cafes & restaurants; and clothing & footwear) have now returned to pre-pandemic levels of spending.
- the June result was the 16th consecutive month in which spending increased.
A lot of consumers are sitting on a lot of cash
Households are sitting on enormous piles of savings, which could potentially be spent in the coming months and into 2023.
In the December 2019 quarter, which was the last before the pandemic, households saved an average of 7.0% of their income. By June 2020, that had soared to 23.7%, because people had received government stimulus payments, they had fewer opportunities to spend (as they were under lockdown) and they wanted to put money aside to deal with an uncertain future.
In the March 2022 quarter – the most recent for which there’s data – the household saving ratio was 11.4%, which is the lowest since the early days of the pandemic, but still well above the long-term average.
So a lot of consumers are sitting on a lot of cash. Time will tell how much of that gets spent on goods and services.
Do you need finance to expand your business, purchase new stock or invest in profit-generating equipment? If so, get in touch and I’ll be happy to discuss your options with you.