Australia | Apr 15 2013
-More spending planned on credit
-Less focus on saving
-Sentiment supported by low rates
By Eva Brocklehurst
After months of hearing about the "cautious consumer" it's a change to hear about increased spending. Consumers are not throwing caution to the wind but more are planning to use credit cards in the current quarter and maintain less of a focus on saving. This is a finding of the June quarter Dun & Bradstreet Consumer Credit Expectations Survey.
The survey found 41% of consumers with a credit card intend to use it for purchases they couldn't otherwise afford in the months ahead and this is the highest level in three years. This quarter 26% now indicate they are more likely to save money compared with the same time last year, down 5% on the prior quarter's survey. It's the lack of pervasive negative news that's given consumers heart, despite a patchy performance in the macro economy. Consumer sentiment measures are showing an improvement since the latter part of 2012.
Dun & Bradstreet's director of corporate affairs, Danielle Woods, views it thus: "With the RBA maintaining low interest rate levels, the unemployment rate relatively steady, house prices recovering, and a bullish share market, consumers are signalling that the positives outweigh the negatives and consequently are willing to spend more freely on credit."
Trading conditions for business have been difficult for some time and it is hoped that there will be a flow-on effect. The survey also found that, although consumers plan to increase use of credit cards, they are not expecting their financial position to be negatively affected. The number of people expecting difficulty meeting credit obligations was unchanged at 34% for the third consecutive quarter. The number expecting the level of household debt to be higher during the quarter was also flat, at 19%.
The survey revealed levels of financial concern among consumers did vary across the country. Financial concerns were highest amongst Queenslanders (59%) and D&B notes recent floods have made a mark. South Australia and Northern Territory are close behind at 58%. In contrast, Western Australians are less likely to be concerned about their financial position (43%). D&B's economic advisor, Stephen Koukoulas, believes the survey fits with a range of other indicators. Most notable is the pick up in retail spending in the early months of 2013 and the rise in consumer sentiment since late 2012. Mr Koukoulas expects the focus on rebuilding savings and reducing debt and leverage to the exclusion of spending could be ending.
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