Australia | Nov 16 2009
By Chris Shaw
The Australian economy has performed well enough in recent months to justify Reserve Bank of Australia (RBA) moves to lift official interest rates but it hasn’t been enough to stop consumers from taking a cautious attitude into the upcoming Christmas season.
The Westpac-Melbourne Institute Consumer Sentiment survey for November, released last week, included additional questions regarding expectations with respect to spending on gifts this year compared to last year, with just under 35% of those responding indicating they would spend less on Christmas presents this year compared to 2008. Around half expected to spend the same amount, while only 14.2% indicated they planned to spend more this Christmas than they did last year.
In terms of actual spending levels, Westpac senior economist Matthew Hassan notes about 40% of Australian households expect to spend around $500 on Christmas presents, one quarter anticipate spending between $300-$500 and just more than 30% are expecting to spend less than $300. This implies an overall average household spending rate on presents of about $317, or total spending on gifts of around $2.2 billion.
Not surprisingly Hassan notes those on lower incomes were looking to lower their spending levels this year, with 44.6% of those on less than $40,000 per year in annual income planning on cutting spending.
Overall, Hassan suggests the stimulus payments last year likely boosted Christmas spending numbers, as the latest expectations are at odds with buoyant consumer sentiment levels. While this month’s consumer confidence number showed a slight dip from October, overall the index is now much higher than it was one year ago when the GFC sparked the descendence of doom and gloom. One might have hoped Christmas 2009 thus would have seen a more indulgent mood.
It is nevertheless possible, Hassan suggests, that the results may reflect something of a regular bias against Christmas spending that eases as the season gets under way. Intentions in November may be to be budget-conscious, until a later buying momentum builds.
Either way, retailers may not necessarily looking at as bountiful a Christmas as they hoped for.
