ANZ: July Spending Down, Are Darker Days Ahead?

ANZ note that their “observed spending has dipped after a strong June: Average daily spending for the first 10 days of July was down 8.3% compared to June. However, it is normal to see a drop off in spending after end-of-financial-year (EOFY) sales. If we look back at July 2019 (before lockdowns in 2020 and 2021), average daily spending was down 6.6% m/m in the first 10 days. So, did consumers bring forward spending for EOFY sales or are households starting to hunker down and cut back on consumption? We think a lot of the fall is due to a bring forward in spending: Average daily spending was up 6.5% m/m in June and came home particularly strong in the final days of the month. Therefore, a decline was almost inevitable after the spending spree. With the conclusion of the sales, average daily spending on shopping has fallen 13.3% m/m, based on the first 10 days of July. We have also seen a 18.1% m/m decline in daily average spending on services. On the flip side, average daily spending on entertainment has continued its strong form, growing a further 30.2% m/m, underpinned by elevated spending at cinemas.”