Cautious consumer spending belies opportunities for advisers

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A survey released yesterday shows Australians are cutting down on household debt and embracing financial conservatism amid the current period of moderate economic growth.

Dun & Bradstreet’s Consumer Credit Expectations Survey measures expectations for savings, credit usage, spending, and debt performance among 1,218 respondents aged 18-64.  For the March quarter, it shows applications for home loans, personal loans, credit cards and credit limit increases, will be flat. Consumers are favouring debit cards over credit cards, with the highest number of people with a debit card (77%) since September 2009.

While the conservative mood might see an improvement in personal debt and delinquency, it could have a negative effect on people who run their own business, says Dun & Bradstreet’s CEO Gareth Jones.

“This attitude towards spending, especially on discretionary items, can have a negative knock-on effect for Australian businesses; something that has been revealed in the latest Australian Bureau of Statistics (ABS) retail figures, which showed only modest activity, and also in the lower sales expectations from our recent Business Expectations Survey,” he says.

The ABS reported a retail turnover fall of 0.1% in November 2012, seasonally adjusted, following a relatively unchanged October 2012. The largest contributor to the fall was household goods retailing (-0.9%) followed by clothing, footwear and personal accessory retailing (-0.6%) and department stores (-0.4%).

The number of Australians indicating financial concern remains relatively high at 49%. The associated subdued consumer confidence this brings – and the spending activity and cash flow impact this has on businesses – continues to create headwinds for an economic recovery.

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