Do hotspots tell story of Vic’s future spend?

A second wave of growing cases in Melbourne has had a detrimental impact on households and businesses, particularly those living in or near areas where many new COVID19 cases have been identified.

"There is much to learn about second-wave behaviours by comparing spending in the hotspots to the rest of Melbourne and greater Victoria."

While containing the spread is the priority, this new lockdown (8 July to 19 August) to metropolitan Melbourne and the Mitchell Shire will have implications for the economic recovery.

Only hotspots were affected for the last four days of the week to 5 July, so the general lockdown effects are likely to be more pronounced in future weeks but there is much to learn about second-wave behaviours by comparing spending in the hotspots to the rest of Melbourne and greater Victoria.

Spending’s crystal ball

Total ANZ-observed spending across the hotspot postcodes was higher (+30 per cent year-on-year for the week to 5 July) than the rest of metro Melbourne (+14 per cent year-on-year). But unlike the first lockdown, residents have government support such as JobKeeper, JobSeeker and mortgage deferrals from the beginning of this lockdown. This may help mitigate the economic impacts.

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ANZ-observed grocery spending growth in the hotspots (+30 per cent year-on-year for the week to 5 July) was broadly in line with the rest of metro Melbourne (+33 per cent year-on-year). ANZ data showed no evidence of stockpiling in the hotspots.

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Dining in the hotspots was down sharply (−41 per cent year-on-year) compared to the previous week (−10 per cent year-on-year for the week to 28 June), as local options were once again limited to takeaway only. 

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Shopping spending growth in the hotspots was stronger than the rest of metro Melbourne through May and June, but the gap seemed to widen in the week to 5 July (+68 per cent year-on-year for hotspots compared with +25 per cent year-on-year for the rest of metro Melbourne).

This suggests those in locked down hotspots may have shifted to home-related shopping - a different pattern than the first lockdown in March, where spending dropped overall. 

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Hotspots are likely to have had stronger year-on-year growth in shopping through April and May because these areas were less exposed to tourism than Melbourne’s CBD and inner suburbs, so they did not have a “tourism gap” in shopping this year compared to last year.

ANZ-observed health and fitness spending growth for the week to 5 July (−18 per cent year-on-year) deteriorated sharply compared with the previous week (−6 per cent year-on-year), as gyms and local beauty services closed again.

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This second lockdown seemed to magnify the year-on-year declines in travel and entertainment spending in hotspots compared with elsewhere.

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Adelaide Timbrell is Economist and Catherine Birch is Senior Economist at ANZ

* Hotspot suburbs refers to the 10 postcodes which initially re-entered Stage 3 lockdown on 1 July. The postcodes are 3012, 3021, 3032, 3038, 3042, 3046, 3047, 3055, 3060, 3064