Australia: Christmas spend a mixed bag - Westpac

Matthew Hassan, Research Analyst at Westpac, explains that despite lacklustre Christmas spending plans, a late rally in sentiment, firmer retail sales and anecdotal reports suggest actual spending has been a little better for Australian economy.

Key Quotes

“Consumers' Christmas spending plans showed a lacklustre lead-in in the 2017 sales period with responses around their 10yr avg. However a solid lift in consumer sentiment through Dec-Jan, a lift in retail sales in Oct-Nov and anecdotal reports suggest actual spending may have been better.”

“When asked back in Nov, just under a third of Australians expected to spend less on gifts this year than last, with 54% expecting to spend about the same and just 11% spending more. In indexed net balance terms, the 2017 reading is 78, down 2.3% from 79.9 in 2016. While far from the disastrous 66 in the depths of the GFC, the 2017 reading is also well below the most recent peak in 2015 (87.0) and the record high in 2007 (91).”

“Overall, it is consistent with flat per capita growth in non-food retail. That said, retail figures for Oct-Nov suggest a slightly firmer pace around 0.3%yr (1.9% including population). Last year, non-food retail sales over Nov-Dec were $1346 per person (noting that this excludes spending on services and via offshore based online retailers, and and includes ‘non gift’ retail spending locally). This year’s Nov retail figures suggest retail sales may be around $1350 per person for 2017.”

“On balance, Christmas 2017 looks to have been a ‘middle of the pack’ spending result. The full wash-up will become clearer once the Dec and Jan retail figures are released. The Amazon launch in late Nov may also have impacted volumes and pricing although industry reports suggest the initial impact was more muted than many expected.”