Lockdown 2.0 slows spending gains

ANZ-observed spending in Melbourne fell 11.6 per cent year-on-year for the week to 18 July, while in Victoria it fell 7.1 per cent year-on-year.

"Despite lockdowns in Melbourne, spending nationally was relatively stable in July, but improvements in social and movement categories stalled.”

Spending in Melbourne on dining and takeaway (-52 per cent year-on-year) and fashion (-48 per cent year-on-year) deteriorated sharply as a result, as did accommodation spending in both Melbourne (-57 per cent year-on-year) and regional Victoria (-26 per cent year-on-year).

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Despite lockdowns in Melbourne, spending nationally was relatively stable in July (+10.4 per cent year-on-year for the week to 18 July) but improvements in social and movement categories stalled. Retail growth remained the highlight of ANZ-observed spending (+25 per cent year-on-year).

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There seems to be no slowdown in ANZ-observed household goods spending as electronics sales jumped back up past the +60 per cent year-on-year mark and other home enhancement categories such as furniture (+50 per cent year-on-year) and homewares (+30 per cent year-on-year) remained very elevated.

Nationally, dining and takeaway (-3.4 per cent year-on-year for the week to 18 July) and fashion (-1.4 per cent year-on-year) were back in negative territory as a result of Melbourne’s lockdown. Supermarket (+23 per cent year-on-year) and specialist food retailer spending (+30 per cent year-on-year) remained very strong.

Unlike during Lockdown 1.0 there is no evidence of “stockpiling” from supermarkets in Melbourne or elsewhere.

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Travel spending improvements stalled as Melbourne’s situation worsened and some state borders closed. National accommodation spending growth was -37 per cent year-on-year for the week to 18 July, almost no improvement since mid-June (-38 per cent year-on-year for the week to 18 June) but better than mid-May (-69 per cent for the week to 18 May).

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Decreased cash use since the start of the pandemic is likely to inflate the year-on-year growth rate of some categories of spending.

Adelaide Timbrell is Economist and David Plank is Head of Australian Economics at ANZ