Australians are buying more alcohol as restrictions ease, study shows

As restrictions ease Australians have rediscovered the urge to splurge and one graph has revealed what is our must have post-lockdown indulgence.

Spending data from one of Australia’s biggest banks has suggested that an economic recovery could be under way as Australians emerge from lockdown and open their wallets.

And where is all that cash going now it’s out of hibernation? To the pub of course, as Aussies crave the novelty of sinking a pint with mates rather than opening a tinnie in front of the telly.

We’re also splashing out on some new togs to wear to the pub. To burn of those carby drinks, we’re buying bikes – lots of them.

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But the recovery could take a long time with the NSW Government today warning the economy of Australia’s largest state economy could slump by 10 per cent this year with the jobless figure going up to 7.75 per cent. There are also fears of an economic shock when JobKeeper payments cease in September.

An analysis by Commonwealth Bank, released today, said government action and the gradual reopening of the economy has led to a marked increase in consumer spending.

“We are seeing some big changes taking place in household spending that provide early signs of stabilisation and recovery in some parts of the Australian economy, largely driven by changes in government policy,” said CommBank’s Chief Economist Stephen Halmarick.

Commonwealth Bank data on spending during the week of 12 June 2020, has shown food sales in supermarkets have plateaued (in blue) but restaurant and cafe sales are doing up (red).

AUSTRALIA’S SPENDING INTENTIONS

The bank released two pieces of data: one on “spending intentions” during May and another on actual credit and debit card spending during the second week of June.

Spending intentions is essentially a bit of crystal ball gazing on emerging trends in household spending based on actual transactions but also online search activity. So, a trend suggesting Australians might be about to start travelling again can be garnered from both payments for flights and hotels but also Google searches on destinations.

And, yes, it seems we’re keen to start moving again with travel spending intentions stabilising in May following a more than 50 per cent drop in the preceding months.

“While Australians may not be able to holiday overseas until well into 2021, domestic tourism is likely to get a significant boost in coming months. Australians will no doubt be keen to visit family and friends around the country and use the opportunity to explore the best that Australia has to offer,” Mr Halmarick said.

Home buying spending intentions also stabilised in May driven by an increase in mortgage applications as house prices fell. Auction clearance rates have improved, although turnover remains low.

Cafes and restaurants have seen a big rise in revenue as restrictions ease. Picture: Cameron Spencer/Getty Images.

We were also keen to spend money on shopping and entertaining but less so on cars and educational services.

A notable insight from May was the slump in physical cash transactions.

CommBank said there was a 29 per cent drop in cash withdrawals from ATMs and branches as Australians opted for contact free card and phone payments instead.

BIG BOOST FOR BARS

But what of recent actual spending – the dollars we have been handing over? Spending data from the bank for the week ending June 12, 2020 showed that expenditure is continuing to grow as lockdowns ease.

After in-store sales fell in a heap during late April and early May – down as much as 30 per cent – last week they were actually modestly higher than this time last year as people felt the urge to splurge.

Online sales remain at a higher rate than last June but that pandemic boost looks to be waning as physical stores reopen leading CommBank to speculate that the “growth in online spend looks to have peaked”.

Overall retail spending is up almost 25 per cent year-on-year primarily driven by food which has plateaued at a level higher than 2019. That could mean we’re all keeping out pantries stocked up, just in case.

Household equipment and furniture retailers are having a stellar 2020 as we continue to nest. There’s also been a modest uptick in clothing sales.

Alcohol services sales (pubs and clubs) has seen a huge jump from dire levels in April and May. Picture: Commonwealth Bank

But the real comeback kid of early June has been booze. If spending in pubs and restaurants is a clue to how the economy will recover, it’ll be a U-shaped recovery. Not the V-shaped recovery, where sales shoot back up immediately, but certainly better than the dreaded L-shaped recovery where spending halts at a lower level than previously.

A graph produced by the bank shows several months where alcohol services, which is drinking at hotels and pubs, bumbled along at almost 80 per cent below normal levels reflecting the fact most were forced to close.

But last week, spending on alcohol services was down by around a mere 25 per cent year-on-year. In any normal period, that would be a huge drop, but compared to last month it’s a figure that will have publicans cheering. And that line shows no sign of halting its journey north with queues seen outside some pubs as strict capacity limits are imposed.

A boost in sales for restaurants and cafes as well shows it’s less about booze and more about how keen we are to get out of the house and mix with our nearest and dearest.

Finally pubs, like the Boundary Hotel (above) can open their doors. Picture: Richard Gosling/AAP

The owner of Geelong’s Hendry Cycles, Steve Draper, has said bikes have been walking, or rather wheeling, out the door. Picture: Peter Ristevski

In total, though, we’re still spending less on alcohol. We are going out more than we were, but less than we did, and not drinking as much at home.

In addition, bottle shop sales are drifting down as bars reopen. Industry group Alcohol Beverages Australia today said $8.5 billion had been wiped from hospitality business sales representing close to 10 per cent of annual revenues with April 2020 likely to go down as the worst month on record for beer, wine, and spirits producers.

As capacity limits are withdrawn in pubs and restaurants, it’s expected the trend will continue with spending in pubs and restaurants rising and bottle shop sales coming down. The continued closure of nightclubs may take some of the sheen off this progress.

Where we’re spending less is on education. Health services including dentistry and optometry are also down which may be a reflection of the necessary lack of social distancing in these industries.

Of the three biggest states, spending is Victoria is rising at a slower rate. Picture: Commonwealth Bank.

STATES RECOVERING QUICKEST

Tasmania, the Northern Territory, South Australia and Queensland have all seen the sharpest rise in consumer spending over the last month which is likely to do with fewer cases of coronavirus and correspondingly fewer restrictions in these areas.

Victoria is the laggard state. While spending has improved – up slightly on this time last year – the slower roll back of lockdown restrictions has given Victorians fewer opportunities to spend.

CBA’s Mr Halmarick struck a positive note.

“While we know that the Australian economy is in recession, the path to recovery is becoming clearer,” he said.