If Australian consumers are saving more, they are certainly spending less with retailers.
It’s why consumption is not as strong as it was before the GFC started in 2008 and it’s why retail sales are weak, as we saw yesterday.
In fact this battle between savers and spenders was well illustrated by the 1.1% fall in retail sales in October from September.
While Australians were spending less, they whacked another $2.5 billion into bank deposits in the month, some of which could have been spent in retail outlets instead.
The October credit card figures are not out yet, but the RBA figures for September show a fall in the number and value of transactions from August, and both are lower than the boom month of March 2010 so far.
So it’s clear the new culture of cautious spending is influencing all forms of consumption, especially at the shops, and in October, at coffee shops and cafes which had resisted the trend for most of this year.
Some analysts and commentary said the talks about higher interest rates in October helped make consumers less willing to spend.
(The RBA surprised by not lifting rates at the start of the month, which then sparked a long debate about whether they would rise in November, and they did in another surprise).
But it is equally obvious that the talk about rates rising just added to the already heightened level of caution among consumers.
Now analysts are saying that the November figures could see another dip because of the rate rise and the argument over bank rate increases.
But it is equally possible that with a rate rise out of the way and store sales starting early, consumers may have decided to spend a bit more.
What’s interesting is the higher savings by consumers and caution about spending hasn’t been picked up in the various consumer confidence surveys.
Perhaps they need to change some of their questions.
Seasonally adjusted sales fell 1.1% in the month while the market had been forecasting a rise of 0.4% (oops, missed that one).
Sales of clothing, footwear and personal accessories dropped 4.6% in the month, while department store sales shrank 1.1%.
The largest fall in October 2010 was recorded in cafes, restaurants and takeaway food services (-4.8%), followed by clothing, footwear and personal accessory retailing (-4.6%), other retailing (-2.0%) and departments stores (-1.1%).
Turnover rose in food retailing (0.6%) and household goods retailing (0.5%).
Turnover fell in New South Wales (-1.8%), Queensland (-1.2%), Victoria (-0.8%), the Northern Territory (-4.9%), Western Australia (-0.3%) and South Australia (-0.2%). Turnover rose in the Australian Capital Territory (0.6%) and Tasmania (0.5%).
Trend turnover was relatively flat (0.0%) in October 2010.
This follows a revised rise of 0.1% in September 2010 and a revised rise of 0.2% in August 2010. In the twelve months to October 2010 trend turnover rose 2.8%.
