Australia household spending growth solid in November, boosting economy

By Stella Qiu

SYDNEY, Jan 12 (Reuters) - ⁠Australian household ⁠spending growth ‍was solid for a second month in November as consumers splashed out on Black Friday sales, concerts and sporting fixtures, data ‍showed on Monday, another sign the economy was gathering steam.

The results ​for October and November point to a strong fourth quarter for consumer spending, which is ​likely to add to the case for a resumption of interest rate hikes given the economy is already hitting speed bumps.

Data from the Australian Bureau of Statistics showed its ​monthly household spending indicator (MHSI) rose 1.0% in November to A$79.4 billion ($53.17 billion), on top of a revised jump of 1.4% the previous month.

The annual ​pace of spending growth picked up to 6.3%, the highest level since September 2023, from 5.7%.

"The undeniable ‌strength in household consumption will likely set the alarm bells off for the RBA," said Abhijit Surya, senior APAC economist at ​Capital Economics.

"The fact that growth was driven ⁠to a greater extent by services spending suggests that there is in fact solid momentum behind the consumption rally," he ‌added.

Spending on goods climbed 0.9% with clothing, footwear, furnishings and electronics seeing the biggest gains as consumers took advantage of discounts. Spending on services rose 1.2% driven by ‌major events, including concerts and sporting fixtures.

The Reserve Bank of Australia cut interest rates three ‌times last year to 3.6% but has warned the next move could be up rather than down because inflation has accelerated.

Headline inflation ran at an annual 3.4% in November, ‍while the core measure slowed to 3.2%. Both were above the central bank's target band of 2% to 3%.

Swaps imply ⁠a 25% chance of a rate hike in February, while a move in May is about 76% priced in. For all of 2026, a total tightening of about 30 basis points is expected.

($1 = 1.4934 Australian dollars)

(Reporting by Stella Qiu and Wayne Cole; Editing by Jamie Freed)

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