NAB Group Economics data shows rising consumer spending

A busy Christmas period has spilled over into the new year, with consumer spending rising during the first week of January.

NAB’s group executive for business and private banking Andrew Irvine said spending during the holiday period had increased his confidence in the economy. Picture: Robert Pozo

A busy Christmas period has spilled over into the new year, with consumer spending rising during the first week of January despite COVID-19 restrictions suppressing hospitality spending in the eastern states.

Data from NAB Group Economics shows that consumption spending was 4.1 per cent higher in the week to January 9 than it was in the previous year, when bushfires were blanketing large parts of the country.

The active week comes after a volatile period when consumption spending increased by 26.4 per cent in the week leading up to Christmas, before falling 1.1 per cent in the week leading into the new year.

NAB’s group executive for business and private banking Andrew Irvine said spending during the holiday period had increased his confidence in the economy.

“In conversations I’ve had with customers it has been clear that the Christmas period brought a great boost to their trading, particularly for retailers,” Mr Irvine said.

“We are increasingly confident in Australia’s ability to rebound quickly and strongly from COVID-19.

“We are buoyed by the growth experienced by the retail sector with consumption up 4.1 per cent in the first week of January and are determined to continue to back our business customers as Australia maintains its economic recovery.”

Spending accelerated the fastest in COVID-19-free jurisdictions: the Northern Territory saw spending jump 12.5 per cent, followed by Western Australia’s 8.4 per cent rise.

South Australia booked a 6.5 per cent increase, while Victoria and Queensland recorded increases of 4.7 per cent and 4.6 per cent respectively.

NSW recorded a modest 1.8 per cent increase as it continued to grapple with a December COVID-19 outbreak, while the ACT recorded a 4.6 per cent decline as restrictions on travellers implemented in December remained in effect.

The best performing sector was the arts and recreation services, which was up 16.4 per cent compared to the previous year, followed by retail trade which grew 14.1 per cent, supported by strong growth in electrical goods and specialised food and liquor.

Unsurprisingly, administrative and support services, which includes travel agency businesses, was down 72.9 per cent year on year, while education and training was down by 21.9 per cent as international travel restrictions continue to prevent an inflow of international students.

Hospitality consumption spending was up by 3.9 per cent, but NAB data showed payment inflows into the sector over the last six weeks were down by 4.5 per cent year on year.

“It’s clear though that businesses in the hospitality sector are struggling where they have been impacted by lockdowns and border restrictions in some states,” Mr Irvine said.

Overall, payment inflows grew by 4.7 per cent to all businesses, and in a sign of economic recovery, the JobKeeper subsidy accounted for just 0.4 per cent of the growth.

Corporate-sized firms captured most of the spending activity with inflows growing by 11 per cent, followed by small firms up 5.3 per cent.

Medium firms saw 3.4 per cent growth in inflows while “emerging businesses” saw inflows decline by 2.7 per cent.