Large falls in consumption based spending continue into May: NAB's Alan Oster

EXPERT OBSERVER

Large falls in consumption-based spending post COVID-19 containment measures continued into May and across most industries (with some exceptions such as Construction), although the pace of decline looks to have stabilised.

Business payment inflows however have weakened further across most industries, and remain deeply negative in key parts of the economy (particularly Accommodation & Food Services).

Consumption-based spending has stabilised in recent weeks, but is still down some 15% overall since the start of the year.

The rate of decline in spending has slowed in all states and territories, with the heaviest falls since the start of the year now in the ACT.

By industry sector, consumption spending over the year to date is down most in Administration & Support Services, including Travel Agents (-88.9%), Accommodation & Food Services (-56.0%) and Health Care & Social Assistance (-40.3%).

Spending has grown in a handful of industries - Construction (28.3%), Utilities (7.2%) and Retail Trade (1.9%).

Some sub-industries have seen solid spending growth including Internet Publishing & Broadcasting (39.9%), Construction Services (23.4%) and Gambling (22.4%). But some - Motion Picture & Sound Recording Activities (-98.3%), Administration Services (-90.1%) and Other Transport (-88.2%) - are down heavily.

Business payment inflows into NAB merchants have also fallen sharply.

Business payment inflows into NAB merchants fell in May (-8.6%), after growing in the first 4 months of the year.

Inflows into Corporates were positive but have halved since April, and are falling for small, medium and large firms.

By industry, inflows are still falling most in Arts & Recreation Services (particularly Amusement & Other Activities and Sports & Physical Recreation) and in Accommodation & Food Services (particularly clubs), but at a slower rate. Inflows however rose sharply in Manufacturing (particularly in Pulp & Paper Manufacturing).

ALAN OSTER is the NAB Group Chief Economist