Westpac with the note.
The Westpac Card Tracker Index showed a slight turnaround in the first week of June, rising 2pts to 132.5 over the two weeks to June 3, but in the context of a clear weakening since March.
Adjusting for regular seasonal variations, quarterly growth momentum remains firmly in negative territory, suggesting the stalling evident in Q1 may be followed by an outright contraction in Q2.
The weakening is broad-based. Both discretionary and essential categories showed slowing annual growth through the month of May that has carried into the first week of June.
This weakening has been more pronounced for retail categories with our estimates suggesting food retail, hospitality and non food retail segments are all tracking significant quarterly declines.
Meanwhile, non retail spend as a whole also looks to be weakening. Note that all estimates are in ‘nominal’ terms and thus include price-driven variations.
By state, all jurisdictions have recorded a further material slowing in annual growth rates.
Annual growth in card activity remains notably weaker in NSW (slightly negative in per capita terms) and Vic) but much firmer in Qld and WA.
The more granular category detail shows continued slowing in food-related spending and hospitality, particularly coming off the back of a period of higher food related inflation.
Fuel spending in particular experienced an average two week decline of -9.1% on the week of June 3.
Official ABS estimates show consumer spending posted a 0.2% increase in real, inflation-adjusted terms in Q1.
This was slightly better than the card tracker guidance. Part of the difference is likely due to when travel-related activity is recorded (at payment in the tracker vs when travel is undertaken in the national accounts).
With this effect likely to be less pronounced in Q2, the weak signals from the card tracker are of some concern.
Looks like RBA shock and awe is landing.
