Buyers ‘cautious, but optimistic’ as consumer confidence sees New Year boost
Consumer confidence has reached its highest point since September 2022, jumping up 4.9 points to 87.4, according to the latest figures from Roy Morgan.
While the number remains significantly lower than the neutral point of 100, and 18.6pts below the reading from the same time a year ago (106.0), the increase is the first seen in the first week of January since 2018, offering a slight reprieve from the declines of the last year.
Consumer confidence is up in the new year
The boost to consumer sentiment comes as the ABS yesterday posted 11.4% growth to household spend over the past 12 months to November 2022, that saw business in transport and hospitality (hotels, cafes and restaurants) industries the biggest beneficiaries, while the furnishings and household equipment category reported a -7% fall.
November was followed by unprecedented spending in December, with pre-Christmas spend hitting a record $74.5 billion according to data released by the Australian Retailers Association’s (ARA) partnership with Westpac DataX. Boxing Day also saw a 15.3% bump on the last year, to reach a huge $1.23 billion in spend on the day.
However, according to buyers, the boost to consumer sentiment and spending is yet to be reflected in any notable uptick in client spend, with most remaining steady through the uncertainty of conditions.
Yet stability in spending at this time, according to director of strategy and research at Pearman Media, Steve Allen, is not to be taken for granted.
Allen told Mumbrella that clients were not as panicked as they had been previously, in similar instances of potential economic downturn or recession.
“We’re in a funny space at the moment where lots of the economic indicators locally, and especially globally, like in the US and to a lesser extent, China, have all got major issues in front of them. But we don’t seem to be having the knock on effect here.”
Generally, he said that the client mood is “cautious, but generally optimistic,” but that “everyone is bracing for when the interest rates start to really bite on mortgages”.
“Those are going to start to bite from February,” he said. “So we’re going to see all kinds of crimping of expenditure from then onwards most likely – but the current outlook is quite positive, cautious, but positive.”
Justin Arlt, head of partnerships, Initiative reiterated Allen’s position, noting that the agency was broadly seeing client spending remaining fairly flat.
“There’s still a bit of uncertainty in terms of whether the cash rate will keep rising,” he explained. “So I think until there’s a bit more stability around that we’re going to keep things some hesitancy from clients to pump a lot more money in”
Arlt added that while there are a small number of clients who have pulled back significantly, there is a larger cohort of clients who are expected to advocate for increased budgets in conversations in the lead-up to the new financial year.
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topics
consumer sentiment
consumer spending
Initiative
Justin Arlt
media buyers
Pearman Media
Roy Morgan
Steve Allen
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