Cautious Australian consumers cut back on spending in 2023

Revenue is falling in a significant number of industries, based on the latest monthly data from the Australian Bureau of Statistics.

Between June and July, revenue fell in seven industry groups:

  • Electricity, gas, water, and waste services: -14.9%
  • Arts & recreation services: -6.1%
  • Manufacturing: -5.0%.
  • Mining: -3.9%.
  • Information media and telecommunications: -3.4%
  • Other services: -2.9%.
  • Transport, postal, and warehousing: -2.3%

By contrast, revenue rose in six industry groups:

  • Professional, scientific, and technical services: 0.3%
  • Retail trade: 0.5%.
  • Accommodation and food services: 0.6%
  • Wholesale trade: 0.9%.
  • Construction: 2.0%.
  • Administrative and support services: 3.8%

Roy Morgan’s consumer confidence index for the week of September 11–17 reported that consumer confidence rose from 77.6 to 79.8 points. However, this was the 29th consecutive week the index had been below 80 points and was still well short of 100 points (which reflects neutral confidence).

While confidence remains low, consumers are likely to be restrained with their spending, which will affect business turnover.

The Australian population increasing at the fastest rate in 15 years

Businesses that are struggling to find staff will be heartened by new data showing that Australia’s population is growing rapidly in most parts of the country.

The population expanded by 2.2% in the year to March, which was the highest rate since 2008, according to the Australian Bureau of Statistics.

  • The states with the highest growth rates were Western Australia (2.8%), Victoria (2.4%), and Queensland (2.3%).
  • They were followed by the ACT (2.0%), New South Wales (1.9%), and South Australia (1.6%).
  • The Northern Territory (0.9%) and Tasmania (0.4%) recorded sluggish growth.

Net overseas migration accounted for 81% of Australia’s population growth, with the number of arrivals far exceeding the number of departures. That means there’s been a significant increase in the number of visa-based workers and students.

Australia’s unemployment rate is a very low 3.7%, which is why so many businesses are struggling to find staff. If the population keeps growing strongly, that may become easier.

Australian Government is looking into data sharing

The federal government has released a new discussion paper on ‘screen scraping’, which is a common practice in which consumers hand over their credentials, like log-in details and passwords, for a third party to access their account.

It comes after a recent statutory review of the Consumer Data Rights (CDR) recommended screen scraping be banned where the CDR is a viable alternative.

The aim of the consultation period, which lasts until October 25, is to understand how screen scraping is used and the feasibility of a ban.

This follows on from the recent release of exposure draft rules that would expand the CDR, which is already used in the banking sector, to the non-bank lending sector.

“The proposed expansion to non-bank lending is expected to give consumers a more holistic view of their financial status when making significant decisions and a safer alternative to screen scraping,” Minister for Financial Services Stephen Jones said.

“These two pieces of work are aimed at giving Australian consumers more ways to take control of their household finances and greater confidence that their data is being protected.”

Australian Inflation Trending Down 2023

The national inflation rate has fallen in six of the seven previous months, from 8.4% in December to 4.9% in July.

The Australian Bureau of Statistics measures price changes in 11 different groups, about half of which experienced below-average inflation:

  • Transport: 0.3%.
  • Communications: 0.3%.
  • Clothing and footwear: 1.5%.
  • Recreation and culture: 4.1%
  • Furnishings, household equipment, and services: 4.3%
  • Alcohol and Tobacco: 4.5%

The other groups experienced above-average price growth:

  • Health: 5.2%.
  • Education: 5.2%.
  • Food and non-alcoholic beverages: 5.6%
  • Housing: 7.3%.
  • Insurance and financial services: 8.5%

The good news is that inflation is expected to continue falling.

The Reserve Bank has forecast that inflation will decline to 4.1% by the end of this year, 3.3% by the end of 2024 and 2.8% by the end of 2025.