UBS survey indicates Australians in rush to boost savings buffers

Anxious Australians are building a savings buffer as money pours into bank accounts from super withdrawals and government payments.

Data from a UBS consumer confidence survey shows 23 per cent of respondents said they had less than one month of savings buffers if they were to lose their job.

Anxious Australians are building a savings buffer as money pours into bank accounts from super withdrawals and government payments, a survey shows.

Data from a UBS consumer confidence survey shows 23 per cent of respondents said they had less than one month of savings buffers if they were to lose their job, down from 39 per cent in April.

The rate of those reporting they had less than six months of savings if they were to lose their job has also been falling, down from 63 per cent earlier in the year to 52 per cent.

“This suggests that households have been building liquidity buffers since April,” UBS notes.

However, the UBS data notes that many expect COVID-19 to affect their spending patterns for more than 12 months.

“This suggests a quick normalisation of spending patterns to pre COVID-19 levels may not be achieved,” UBS notes.

The survey of more than 1000 people shows the increased savings rates have come alongside a growth in people reporting that they are willing to spend money.

The survey indicates spending and income intentions have improved since the last survey in April. High-income households saw the largest improvement in their confidence to spend.

However, the improvement follows a rapid collapse in confidence as the coronavirus pandemic took hold, which saw spending patterns rapidly shift downwards.

A greater share of consumers now look to increase their spending in the months ahead, but the numbers are still weak.

UBS reports consumers say they are now less focused on cutting back debt, and high-income households are looking to take on more debt. Households with incomes lower than $48,000 are looking to reduce debts.

While consumers have noted they have cut their spending in the past 12 months, a greater share are now looking to increase spending. “The main driver behind the positive consumer outlook has been higher income expectations,” UBS notes.

“While change in incomes over the past 12 months have remained weak, income expectations for the next 12 months have increased substantially.”

Victorian consumers bucked the trend, reporting they were feeling less positive.