Australian Capital Territory records largest annual increase in consumer spending

By @diplomatist10 on
A woman uses her mobile phone in front of sale signs in the window of a clothes store at a shopping mall in central Sydney June 6, 2013. Australia's economy posted a second straight quarter of moderate growth as a drop in business investment offset gains
A woman uses her mobile phone in front of sale signs in the window of a clothes store at a shopping mall in central Sydney June 6, 2013. Reuters/Daniel Munoz

The Australian Capital Territory has recorded the strongest annual growth in consumer spending vis-a-vis the whole of Australia with a 12.3 percent surge. This was highlighted in the Commonwealth Bank's business sales indicator report, with the stats welcomed by leading business leaders and the ACT Government.

Compared to the national rate of 6.6 percent and the national decade average of 5.1 percent, ACT’s annual growth rate has almost doubled. According to Canberra Business Chamber chief executive Robyn Hendry it was not unusual for consumer spending to peak after a period of economic lull and uncertainty.

"People are less fearful about their job prospects and many of those who have lost their jobs have already left the territory," she said.

Hendry said the increase in consumer spending could be explained by a weaker Australian dollar combined with the strong performance by local industries. In early September, ACT Chief Minister Andrew Barr announced that the territory’s economy had "turned the corner" and recovered from economic uncertainty.

Surge in domestic tourism

The business chamber leader noted that the rise in consumer spending could be linked to the varying value of the dollar and the choice of people to spend locally rather than overseas.

“With a weakened dollar people are less inclined to take overseas holidays and that matches with the strong increase in domestic tourism we have seen recently,” Hendry explained.

In terms of consumer verticals, at the national level clothing and miscellaneous stores recorded the strongest growth in August with a 1.1 percent boost. Professional services recorded a 0.7 percent increase. The growth in spending has been high in the hotels, clothing, manufacturing and personal service sectors.

Turnbull effect

Meanwhile, the leadership change has also brought in a new cheer in economic outlook. Mr Malcolm Turnbull's elevation to prime minister coincided with a weekly jump in consumer confidence in at least seven years, reported 9 News.

"Increased confidence is a positive for the Australian economy, hopefully translating into increased spending, investment and employment," Commonwealth Securities chief economist Craig James said.

The ANZ-Roy Morgan consumer confidence gauge surged 8.7 percent in the third week of September, recovering from the 7.1 percent drop in the previous fortnight.

The report said the reasons for this bounce-back are because Mr Turnbull has put tax reform as the top priority of his reform agenda. The appointment of Scott Morrison as Treasurer mid-way through the tax white paper process is also significant.

However, shadow treasurer Chris Bowen played down the cheer and said it is unrealistic to consider an increased GST to work as the linchpin of all tax reform. He said boosting GST revenue was touted as the means for paying to states' health costs, cutting personal income tax, abolishing stamp duty, reducing corporate tax and improving resources for the budget.

“It's like when you get a raise in your salary and you think of five things you'd love to do with the extra money, but deep down you know you can only do one,”  Bowen quipped.

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