Australian households’ spending intentions for travel, entertainment and home-buying jumped in March 2021 as the economy extended its recovery from the Covid pandemic.
This is according to the latest the Commonwealth Bank Household Spending Intentions study, which analyses bank customer behaviour and household spending search activity from Google Trends to predict spending patterns in the country.
The conclusions of the latest study support the forecasts of the bank’s economists that GDP is likely to expand by 4.7 percent in 2021, while the unemployment rate is expected to decline to 5.0 percent.
“The stronger Household Spending Intentions report is another signal that Australia’s economic recovery is ongoing,” said the bank’s Chief Economist, Stephen Halmarick.
Travel spending expected to improve markedly
Travel spending intentions posted the strongest year-on-year improvement among all seven categories in the study. The increase is partly driven by stronger travel-related spending and partly due to the collapse in spending recorded in March last year.
“The travel sector was among the hardest hit by the onset of the pandemic, with border closures and a countrywide lockdown stifling nearly all travel-related activity,” Halmarick explained.
“This month’s data, while distorted by base-effects, still demonstrates how far the sector has recovered since last year.”
For the year to March, there was a strong increase in spending intentions for destinations such as amusement parks and aquariums, as well as accommodation such as hotels, motels, resorts and motor home and RV rentals.
Still, the annual pace of spending for airlines, cruise ships, timeshare, travel agents and bus lines all posted declines, indicating that the industry’s rebound remains uneven.
Bars, restaurants and movies are also on the up
“A year ago bars, clubs, restaurants and movie theatres [struggled] with the swiftly escalating restrictions in the lead-up to a countrywide lockdown,” Halmarick stated.
This March, the picture for this sector is much improved as pent-up demand among consumers helped spur both actual and prospective spending [in] the category.”
Home-buying intentions set a new series high in March as both home loan applications and Google searches increased again. This month’s data also reflect the early impact of the pandemic on the nation’s property market, as restrictions and lockdowns stymied home sales in March 2020.
“We continue to see demand for residential property as a key source of support for the Australian economy in 2021,” Halmarick said, adding that low interest rates were contributing to this trend.