Significant Lift in Spending Intentions

Latest data from the Commonwealth Bank Household Spending Intentions (HSI) series provides a positive signal for the Australian economy, with spending intentions holding at “respectable” levels or moving higher in every sector covered by the HSI, except motor vehicles.

CBA Chief Economist Michael Blythe said: “the September edition of the Household Spending Intentions series indicates that spending intentions are improving in Australia, with a combination of income tax refunds and a stronger housing market leading the charge.”

“Significantly, the home buying spending intentions series has moved back into positive territory and this should help drive a further improvement in retail spending intentions in the months ahead,” Mr Blythe added.

CBA’s HSI series offers a forward-looking view by analysing actual customer behaviour from CBA’s transactions data, along with household spending intentions from Google Trends search data. This combination adds to insights on prospective household spending trends in the Australian economy.

Mr Blythe said the inflow of tax refunds into CBA accounts reveals a sharp lift in both the total value of those refunds and the average size of a refund, with the value of inflows in the July/August period about 40 per cent above “normal” levels.

“The refunds are not surprising but the rate of inflow suggests that many households have moved early to secure their refunds. The boost to household spending power is larger and coming through sooner than originally expected,” Mr Blythe said.

“The better news is that this tax refund money seems set to flow through to consumer spending. The upward trend that we have seen in retail spending intentions is a positive signal,” Mr Blythe added.

Mr Blythe also points to Australia’s housing market going from strength to strength.

“The housing market has turned sooner and more aggressively than expected. And CBA’s home buying spending intentions points to further solid improvement ahead,” said Mr Blythe.

“The accelerated turn in home buying intentions is a positive indicator for retail spending, consumer confidence and construction activity,” Mr Blythe added.

The retail household spending intention is back in positive territory for the first time since early 2019.

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