Christmas Spending
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16 November 2009
Australian consumers cautious heading into Christmas season 35% expect to spend less on gifts than last year Households planning to spend $317 on average • The November Westpac-Melbourne Institute Consumer Sentiment survey included two extra questions asking consumers about their expectations for spending on gifts over the Christmas period. The first asked about expected spending compared to last year. The second asked roughly how much they planned to spend.
Consumer Christmas spending – 2009*
• Most consumers expect to either hold steady or reduce spending on gifts this year compared to last year. Just under 35% of respondents said they planned to spend less in 2009 with about half saying their spending would be about the same. Just 14.2% said they would spend more.
Aus
34.8
50.1
14.2
–20.8
• Some of the planned reduction may reflect the boost to last year's Christmas spending from the Government's $8.7bn in fiscal payments. This helped drive a 4% jump in retail sales December 2008 over and above the normal seasonal rise. • This year, about 40% of households plan to spend over $500 on gifts this Christmas. A quarter of households expect to spend $300 to $500 and just over 30% plan to spend less than $300 this year. • Overall, Australian households plan to spend an average of $317 on Christmas gifts in 2009. This points to a total spend on Christmas gifts of about $2½bn. • The cautious Christmas mood was apparent across all states. Households in SA and Qld were marginally more upbeat, with 16% expecting to spend more on gifts this year. There was notably more restraint amongst households in WA, with over 41% planning to spend less on gifts in 2009. However, WA households still expected to spend significantly more on gifts on average ($371) compared to households in the eastern states (where averages ranged from $293 in Qld to $327 in Vic). • Consumers aged 45 to 49 planned to spend the most on gifts, $404 on average. Those aged 50 to 54 were the least upbeat on spending compared to last year, with only 3.4% expecting to spend more in 2009. Those on low incomes were more inclined to spend less on Christmas gifts this year with 44.6% of those earning less than $40k indicating they would be cutting their spend. This seems to confirm the impact of last year's fiscal payments which were predominantly paid to low income households (pensioners and households receiving the income tested family benefit). • Christmas spending intentions are at odds with buoyant levels of consumer sentiment. Some of this is likely due to the fiscal boost to spending this time last year but there may also be a regular bias towards restraint heading into Christmas that eases as the season gets under way.
Expected spending on gifts compared to last year: % responses expecting: less unchanged more
net % exp more
NSW
34.8
50.0
14.0
–21.1
Vic
32.9
54.2
12.1
–21.0
Qld
35.8
48.0
15.9
–19.9
SA
31.2
52.8
16.0
–15.2
WA
41.1
47.2
10.9
–30.5
How much do you plan to spend on gifts this year? %responses
average#
< $100
12.1
Aus
$317
$100 – $299
19.1
NSW
$316
$300 – $499
25.0
Vic
$327
$500 – $749
16.5
Qld
$293
> $750
23.4
SA
$294
Total 100.0 WA $371 *Figures exclude those reporting "no opinion" and do not sum to 100; net percent figures are calculated excluding these non-responses. # Estimate based on interpolated mid-point. Source: Westpac-Melbourne Institute
Xmas spending plans: decidedly downbeat % 70 60
Christmas spending compared to a year ago less the same more
%
most increasing
Source: Westpac-Melbourne Institute
70 most reducing
60
50
50
40
40
30
30
20
20
10
10
0
0
Aus
NSW
Vic
Qld
SA
WA
Matthew Hassan, Senior Economist, ph (61-2) 8254 2100 Westpac Institutional Bank is a division of Westpac Banking Corporation ABN 33 007 457 141. Information current as at date above. This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Westpac's financial services guide can be obtained by calling 132 032, visiting www.westpac.com.au or visiting any Westpac Branch. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac accepts no responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpac is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is regulated for the conduct of investment business in the United Kingdom by the Financial Services Authority. If you wish to be removed from our e-mail, fax or mailing list please send an e-mail to [email protected] or fax us on +61 2 8254 6934 or write to Westpac Economics at Level 2, 275 Kent Street, Sydney NSW 2000. Please state your full name, telephone/fax number and company details on all correspondence. © 2009 Westpac Banking Corporation. Past performance is not a reliable indicator of future performance. The forecasts given in this document are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts.
1
16 November 2009
Consumer Christmas spending plans 40
%
Consumer Christmas spending plans
planned spending on Christmas gifts < $100 $100 - $299 $300 - $499 $500 - $749 > $750
35 30
%
40
450
$
average planned spend on gifts
Source: Westpac-Melbourne Institute
25
$
450
Source: Westpac-Melbourne Institute
35
400
400
30
350
350
300
300
250
250
200
200
150
150
25
20
20
15
15
10
10
100
100
5
5
50
50
0
0
0
Aus
NSW
Vic
Qld
SA
Aus
net %
avg $
net percent (lhs)*
20
avg expected spend (rhs)
350
10
300
0
250
Vic
Qld
SA
WA
net %
450 400
NSW
Christmas spending plans: by age group
Christmas spending plans: selected groups
30
0
WA
avg $
30
net percent (lhs)*
20
avg expected spend (rhs)
450 400 350
10
300
0
250
-10
200
-10
200
-20
150
-20
150
100
-30
50
-40
0
-50
*% reporting spend more minus % reporting spend less
-30 -40
Source: Westpac-Melbourne Institute
-50
male
female
rent
mortgage
net %
20
avg expected spend (rhs)
450 400
300
0
250
-10
200
-20
150
-30
100 *% reporting spend more minus % reporting spend less
-50
Source: Westpac-Melbourne Institute
35-44
45-49
50-54
55-64
65+
%ch
5.0
21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-100 >100 $'000s
50
$5.4bn
*retail sales ex food, over NovDec (Christmas period); variation from trend
40 30
4.0 3.0
+13%
20 10
2.0
0
1.0
50 0
<20
25-34
6.0 $bn
350
10
-40
50
Christmas retail sales: historical avg $
net percent (lhs)*
Source: Westpac-Melbourne Institute
0
18-24
freehold
Christmas spending plans: by income
30
100 *% reporting spend more minus % reporting spend less
Sources: ABS, Westpac estimates
-10
0.0 1993
1995
1997
1999
2001
2003
2005
2007
2009
Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts.
2
Australian consumers cautious heading into Christmas season 35% expect to spend less on gifts than last year Households planning to spend $317 on average • The November Westpac-Melbourne Institute Consumer Sentiment survey included two extra questions asking consumers about their expectations for spending on gifts over the Christmas period. The first asked about expected spending compared to last year. The second asked roughly how much they planned to spend.
Consumer Christmas spending – 2009*
• Most consumers expect to either hold steady or reduce spending on gifts this year compared to last year. Just under 35% of respondents said they planned to spend less in 2009 with about half saying their spending would be about the same. Just 14.2% said they would spend more.
Aus
34.8
50.1
14.2
–20.8
• Some of the planned reduction may reflect the boost to last year's Christmas spending from the Government's $8.7bn in fiscal payments. This helped drive a 4% jump in retail sales December 2008 over and above the normal seasonal rise. • This year, about 40% of households plan to spend over $500 on gifts this Christmas. A quarter of households expect to spend $300 to $500 and just over 30% plan to spend less than $300 this year. • Overall, Australian households plan to spend an average of $317 on Christmas gifts in 2009. This points to a total spend on Christmas gifts of about $2½bn. • The cautious Christmas mood was apparent across all states. Households in SA and Qld were marginally more upbeat, with 16% expecting to spend more on gifts this year. There was notably more restraint amongst households in WA, with over 41% planning to spend less on gifts in 2009. However, WA households still expected to spend significantly more on gifts on average ($371) compared to households in the eastern states (where averages ranged from $293 in Qld to $327 in Vic). • Consumers aged 45 to 49 planned to spend the most on gifts, $404 on average. Those aged 50 to 54 were the least upbeat on spending compared to last year, with only 3.4% expecting to spend more in 2009. Those on low incomes were more inclined to spend less on Christmas gifts this year with 44.6% of those earning less than $40k indicating they would be cutting their spend. This seems to confirm the impact of last year's fiscal payments which were predominantly paid to low income households (pensioners and households receiving the income tested family benefit). • Christmas spending intentions are at odds with buoyant levels of consumer sentiment. Some of this is likely due to the fiscal boost to spending this time last year but there may also be a regular bias towards restraint heading into Christmas that eases as the season gets under way.
Expected spending on gifts compared to last year: % responses expecting: less unchanged more
net % exp more
NSW
34.8
50.0
14.0
–21.1
Vic
32.9
54.2
12.1
–21.0
Qld
35.8
48.0
15.9
–19.9
SA
31.2
52.8
16.0
–15.2
WA
41.1
47.2
10.9
–30.5
How much do you plan to spend on gifts this year? %responses
average#
< $100
12.1
Aus
$317
$100 – $299
19.1
NSW
$316
$300 – $499
25.0
Vic
$327
$500 – $749
16.5
Qld
$293
> $750
23.4
SA
$294
Total 100.0 WA $371 *Figures exclude those reporting "no opinion" and do not sum to 100; net percent figures are calculated excluding these non-responses. # Estimate based on interpolated mid-point. Source: Westpac-Melbourne Institute
Xmas spending plans: decidedly downbeat % 70 60
Christmas spending compared to a year ago less the same more
%
most increasing
Source: Westpac-Melbourne Institute
70 most reducing
60
50
50
40
40
30
30
20
20
10
10
0
0
Aus
NSW
Vic
Qld
SA
WA
Matthew Hassan, Senior Economist, ph (61-2) 8254 2100 Westpac Institutional Bank is a division of Westpac Banking Corporation ABN 33 007 457 141. Information current as at date above. This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Westpac's financial services guide can be obtained by calling 132 032, visiting www.westpac.com.au or visiting any Westpac Branch. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac accepts no responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpac is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is regulated for the conduct of investment business in the United Kingdom by the Financial Services Authority. If you wish to be removed from our e-mail, fax or mailing list please send an e-mail to [email protected] or fax us on +61 2 8254 6934 or write to Westpac Economics at Level 2, 275 Kent Street, Sydney NSW 2000. Please state your full name, telephone/fax number and company details on all correspondence. © 2009 Westpac Banking Corporation. Past performance is not a reliable indicator of future performance. The forecasts given in this document are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts.
1
16 November 2009
Consumer Christmas spending plans 40
%
Consumer Christmas spending plans
planned spending on Christmas gifts < $100 $100 - $299 $300 - $499 $500 - $749 > $750
35 30
%
40
450
$
average planned spend on gifts
Source: Westpac-Melbourne Institute
25
$
450
Source: Westpac-Melbourne Institute
35
400
400
30
350
350
300
300
250
250
200
200
150
150
25
20
20
15
15
10
10
100
100
5
5
50
50
0
0
0
Aus
NSW
Vic
Qld
SA
Aus
net %
avg $
net percent (lhs)*
20
avg expected spend (rhs)
350
10
300
0
250
Vic
Qld
SA
WA
net %
450 400
NSW
Christmas spending plans: by age group
Christmas spending plans: selected groups
30
0
WA
avg $
30
net percent (lhs)*
20
avg expected spend (rhs)
450 400 350
10
300
0
250
-10
200
-10
200
-20
150
-20
150
100
-30
50
-40
0
-50
*% reporting spend more minus % reporting spend less
-30 -40
Source: Westpac-Melbourne Institute
-50
male
female
rent
mortgage
net %
20
avg expected spend (rhs)
450 400
300
0
250
-10
200
-20
150
-30
100 *% reporting spend more minus % reporting spend less
-50
Source: Westpac-Melbourne Institute
35-44
45-49
50-54
55-64
65+
%ch
5.0
21-30 31-40 41-50 51-60 61-70 71-80 81-90 91-100 >100 $'000s
50
$5.4bn
*retail sales ex food, over NovDec (Christmas period); variation from trend
40 30
4.0 3.0
+13%
20 10
2.0
0
1.0
50 0
<20
25-34
6.0 $bn
350
10
-40
50
Christmas retail sales: historical avg $
net percent (lhs)*
Source: Westpac-Melbourne Institute
0
18-24
freehold
Christmas spending plans: by income
30
100 *% reporting spend more minus % reporting spend less
Sources: ABS, Westpac estimates
-10
0.0 1993
1995
1997
1999
2001
2003
2005
2007
2009
Past performance is not a reliable indicator of future performance. The forecasts given above are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The results ultimately achieved may differ substantially from these forecasts.
2
