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The Commonwealth Bank of Australia (ASX: CBA) has observed "big changes" to household spending intentions in May, with upticks for retail and entertainment in particular.
The latest report in the bank's Household Spending Intentions (HSI) series provides early signs of stabilisation and recovery in parts of the economy, largely driven by government policy according to CBA chief economist Stephen Halmarick.
"Data up to the end of May 2020 showed retail spending intentions jumped higher on the month, consistent with our CBA credit and debit card spending data. Improvement was also seen in entertainment spending intentions," he says.
"After big falls in April, spending intentions stabilised for home buying and travel. Health and fitness spending intentions also stabilised after recent gains, while some weakness was evident for education spending intentions and motor vehicle spending intentions."
The economist says travel spending intentions stabilised in May as parts of the economy re-opened.
"While Australians may not be able to holiday overseas until well into 2021, domestic tourism is likely to get a significant boost in coming months," says Halmarick.
"Australians will no doubt be keen to visit family and friends around the country and use the opportunity to explore the best that Australia has to offer."
The key drivers of the jump in retail spending were food, general retail (department and discount stores) and household furnishings and equipment.
"Perhaps adding to coronavirus 'waist-lines', there was also an ongoing increase in spending on both alcohol for at home consumption, and confectionery," he says.
"Weakness is still evident in alcohol sales at licenced premises, as well as restaurants, art galleries, live music venues, bowling allies, cinemas and theatres.
Halmarick adds home buying spending intentions stabilised in May due to an increase in mortgage applications as house prices fell.
"This was especially the case for owner-occupiers looking to lock in low fixed rate mortgages," he says.
"Online Google searches related to home buying decreased in previous months and is in line with house price falls for the month.
"While we know that the Australian economy is in recession, the path to recovery is becoming clearer."
Photo: Visit Melbourne
Updated at 11.32am AEST on 16 June 2020.
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