CBA: Household Spending Intentions To Fall

The CommBank Household Spending Intentions Index fell by 3.8% in April after reaching record-high levels in March.

The dip comes as Australians pull back on home buying, health and fitness, and transport spending while opting to put their hard-earned towards travel, entertainment and retail sectors.

The biggest drop came in home buying, with spending falling 21.5% after gains in February and March and is 13.1% lower than in April last year.

Further falls were seen in the health and fitness sectors, dropping 14% however spending is still up 2.9% on last year. Transport spending fell by 8.6% due to the reduction in the petrol excise but remain 13.5% up on the last year.

With international borders reopened, travel spending reached a new record high in April – exceeding its pre-COVID peak by gaining 10.6% during the month and 41% on April 2021.

Local households are spending more on entertainment, rising 6% in April led by increased activity in concerts and theatres alongside eating and drinking out, yet remains 1.8% down on last year.

Commonwealth Bank of Australia Senior Economist, Belinda Allen, said the seasonal volatility of April data due to additional public holidays meant that year on year movements better reflected the state of the economy,

“With an interest rate hiking cycle now underway the Australian economy is in a strong position. We are seeing a post COVID normalisation of consumer spending patterns, with lower spending on categories that increased during lockdowns like health & fitness, while higher travel and entertainment spending reflects more people being out and about,” said Ms Allen.

“Households have accrued a very high level of savings during COVID, the labour market remains tight and wages growth is accelerating. These factors will assist families with higher mortgage repayments over coming months,” Ms Allen said.

The Chinese owner of bargain app Temu reported slower quarterly profit and revenue growth, capping a turbulent year for the e-commerce giant as it faced stiff competition at home, geopolitical tensions abroad and U.S. tariff uncertainties.

PDD Holdings on Thursday said fourth-quarter revenue climbed 24% to 110.61 billion yuan, equivalent to $15.30 billion, missing a Visible Alpha estimate of 117.83 billion yuan. It was the slowest pace of growth since the first quarter of 2022.

Net profit rose 18% from a year earlier to 27.45 billion yuan, topping analysts’ expectations of 27.00 billion yuan. However, the growth was slower than the 61% rise in the third quarter and the more than twofold increase a year earlier.

“Looking ahead, we will continue to prioritize investments in the platform ecosystem as the cornerstone of our long-term value creation strategy,” said Jun Liu, PDD’s vice president of finance.

Jefferies analysts in a note said PDD’s top-line miss was due to slower-than-expected revenue growth from transaction services, while revenue from online marketing services and others was in line with consensus.

The easing momentum contrasted sharply with the stunning growth rates the company delivered in past years. PDD last year repeatedly warned of a slowdown, pointing to intensifying competition and external challenges.

Pinduoduo, the company’s discount platform in China, has grown rapidly since it launched nearly a decade ago, taking market share from e-commerce stalwarts Alibaba and JD.com . Its sister platform Temu burst onto the international scene in 2022 and swiftly gained attention in the U.S., attracting customers with low prices.

However, Temu has also encountered regulatory scrutiny as it expands overseas. U.S. President Trump in February delayed his plan to end a provision for China imports that lets platforms avoid paying import duties and customs inspections on low-value packages, offering the likes of Temu a brief reprieve.

For the full year, PDD’s total revenue rose 59% to 393.84 billion yuan and net profit climbed 87% to 60.03 billion yuan.

Last month, rival Alibaba posted its fastest pace of revenue growth since late 2023, with revenue for the latest quarter rising 7.6% to 280 billion yuan. Online retailer JD.com earlier this month nearly tripled its quarterly net profit as revenue climbed 13% to 346.99 billion yuan.

U.S.-listed PDD was recently 6.5% lower in premarket trading after the results.

CBA: Household Spending Intentions To Fall

The bank is seeing a post-COVID normalisation of consumer spending patterns.

Fourth-quarter revenue climbed 24% to 110.61 billion yuan, equivalent to $15.30 billion, but missed estimates.