Overview

• Consumer spending softened in October, down 0.3%, ending a run of nine months of positive growth (the last decline was in the Omicron-affected December 2021). Essential services spending rose and retail spending edged higher but broader discretionary spending declined.
• Retail spending rose 0.1% overall, with continued growth in hospitality spending of 0.6% and broadly flat spending on goods retail, down from more substantial growth in September.
• Business credits fell 0.1% in October to be 14.4% higher y/y, with utilities, accommodation & food, education, and retail growing the strongest over the past three months.

Comments from NAB Chief Economist Alan Oster

“Our monthly spending data showed a slowing in spending in October, particularly in discretionary areas such as household goods and recreation & travel, although growth held up in the hospitality sector.”

“We expect the strong inflation seen in Q3 has carried on into Q4, so these nominal data for October may signal some real decline in spending volumes in the month as households begin to feel the impact of higher interest rates.”

“Still, it remains early days and spending growth remains positive across all categories over the past three months, and relative to 2021 when spending was heavily impacted by lockdowns.”

For further details please see NAB Monthly Data Insights (October 2022)