Household spending in Australia rose 0.5% in July, according to seasonally adjusted figures from the Australian Bureau of Statistics (ABS).
“Household spending rose for the third month in a row in July and has now gone up nine times in the last 10 months,” said Robert Ewing (pictured left), ABS head of business statistics. “Household spending is 5.1% higher than the same time last year. This is the highest annual growth since November 2023.”
Households spent more on health services, hotel accommodation, air travel, and dining out during July, contributing to a 1.6% rise in services spending.
“In contrast, goods spending fell 0.3% after mid-year sales boosted spending by 0.9% in June,” Ewing said in a media release.
Five of the nine spending categories rose in July, led by health (+1.8%), with transport and miscellaneous goods and services close behind at 1.5%. The largest falls were for alcoholic beverages and tobacco (-1.9%), and furnishings and household equipment (-1.4%).
Services spending was 8.0% higher than July 2024, while goods spending was up 2.7%.
Miscellaneous goods and services (+8.8%) and Recreation and culture (+8.2%) saw the largest annual rises.
Household spending grew in seven of eight states and territories, led by the Northern Territory (+2.2%) and Western Australia (+1.6%). New South Wales was the only state where spending fell (-0.3%).
Westpac economist Neha Sharma (pictured right) noted that decent spending momentum appears to have carried through into July.
“The ABS monthly household spending indicator rose 0.5%mth in July, in line with our expectations,” Sharma said in a Westpac commentary. “This pushed annual growth to 5.1%yr, the strongest pace since late 2023.
“Households look to be on firmer footing and have been showing greater resilience in recent months. Rate cuts are having a positive impact, alongside a recovery in real incomes which is brightening the consumer mood. All of this should continue to support the household recovery in the coming year.”
However, RBA governor Michele Bullock warned that stronger-than-expected consumer spending could delay future interest rate cuts. Bullock said if spending momentum continues, “there may not be any interest rate declines yet to come,” highlighting that the RBA’s next decision will closely watch consumer trends.
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