A week ago, the Australian Bureau of Statistics (ABS) released its household spending indicator for May, which showed that consumers continue to cut back.
Overall household spending increased by just 0.1% over the year to May, suggesting a decline of around 6% in real per capita terms.
Source: AMP
The decline in household spending is replicated in retail sales data, which experienced a similar decline in real per capita terms:
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Source: AMP
The following chart from Justin Fabo at Antipodean Macro plots the ABS Household Spending Indicator against the national accounts measure of household consumption:
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As you can see, the Household Spending Indicator is pointing to a deepening of the consumer recession afflicting Australians.
On Thursday, CBA released its Household Spending Insights (HSI) indicator for June, which also suggested that consumption weakened over the June quarter:
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As of Q1 2024, Australia’s GDP in per capita terms had declined by 1.3% following five consecutive quarterly declines:
Given that consumer spending typically comprises around 60% of Australia’s growth, the above household spending indicators point to a prolonging and deepening of the recession.
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It also makes another rate hike from the Reserve Bank of Australia an economically dangerous proposition.