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Tuesday 14 July, 2009

 Four in ten working Aussies can only last a
              month on savings
                Credit being used to cover expenses

Outlook for the September quarter 2009:

Current savings
   •   Four in ten (thirty nine percent) Australians could only last for up to one month
       on their current funds if they lost their job

Credit to cover expenses
   •   More than one third of Australians (38%) anticipate a need to pay bills they
       couldn’t otherwise afford on their credit card during the September quarter

Spending intentions
   •   Thirty five percent of respondents indicated their intentions to cut back
       spending in the months ahead

Household debt
   •   One in five (twenty one percent) Australian households anticipate increased
       debt levels in the coming months

Credit applications
   •   Twenty eight percent of Australians intend to apply for new credit during the
       September 2009 quarter

Credit limit increases
   •   Fourteen percent of Australians expect to apply for a credit limit increase on
       their credit card in the coming months

Planned major purchases
    • Thirty two percent of respondents indicated their intention to make a major
      purchase during the September quarter. A further twenty eight percent
      indicated that they had intended to make a purchase but have decided to
      delay the outlay.


Four in ten (thirty nine percent) working Australians could only survive 30 days on
their current savings if they lost their job and thirty eight percent will be forced to use
their credit card to cover expenses in the months ahead, indicating that local
economic conditions continue to impact household budgets.

These findings are from Dun & Bradstreet’s Consumer Credit Expectations Survey*,
which focused on Australians' expectations for savings, credit usage, spending and
debt performance over the September 2009 quarter. The survey found that
Australians are feeling challenged by current economic conditions, with middle
income households ($30,000-69,999) and the two younger age groups (18-34 and
35-49 year olds) in particular, demonstrating signs of financial stress.

A higher percentage of middle income households indicate they would face financial
difficulty if they lost their job. Fifty one percent of people in that group would last only
30 days on their current savings. This compares to thirty two percent for households
earning above $70, 000 per year. Meanwhile forty eight percent of those aged 18-34
indicate they could last only one month on current savings – this is twenty three
percentage points above those aged fifty and over.

The results of Dun & Bradstreet’s latest Business Expectations Survey and recent
unemployment figures highlight the significance of these numbers. Over a third of
respondents in the Business Expectations Survey indicated they were likely to
reduce staff in the September 2009 quarter. These expectations come as the jobless
rate hit 5.8 percent in June and is forecast by D&B to reach 6.5 percent by the end of
the year.

                                            18-34   35-49   50-64







                  Savings to last 30 days             Using credit card to pay for items otherwise
                                                                       can't afford

                             Savings and credit use by age

The Consumer Credit Expectations Survey also revealed that thirty eight percent of
Australians will resort to using their credit card as a means of managing household
expenses during the September quarter. Those aged 18-34 (45 percent) and 35-49
(39 percent) are more likely to resort to credit than their older counterparts (28
percent). In addition, forty two percent of middle income households will use their
credit card to pay for items they otherwise couldn’t afford in the September quarter.

According to Christine Christian, D&B’s CEO, the current economic climate is making
it increasingly difficult for certain demographics to manage their budgets and
consequently they are being forced to use credit in an attempt to manage household


“Deteriorating employment conditions are of significant concern,” said Ms Christian.

“We are now seeing demographics that were previously relatively stable financially
facing difficulties managing their expenses as the rise in unemployment flows
through to households. And, with unemployment expected to continue rising, an
increasing number of Australians will be impacted in the months ahead. This could
result in a further deterioration in consumer finances forcing some Australians into
deeper financial difficulty before conditions improve.

“In addition, the flow on effect of rising unemployment on the economy could also
impact consumer spending, which has been buoyed in recent months by the
government stimulus package. If retail sales drop in the coming months the local
economy will come under increased pressure and we will likely experience another
quarterly contraction in GDP.”

However in a sign that middle income households and younger Australians are
seeking to improve their challenging financial position, thirty seven percent of middle
income households indicated their intent to reduce spending in the coming months.
This compares to thirty one percent of high income households. Meanwhile thirty
nine percent of Australians aged 18-34 plan to cut spending during the September
quarter – that is six percentage points above those aged fifty and over.

Middle income households also indicated their intent to rein in spending and improve
household finances via the postponement of a major purchase. Thirty three percent
of Australians in this group will postpone a planned major outlay – that is
substantially above higher income households at 25 percent. A similar trend
emerged for younger Australians, with thirty four percent of 18-34 year olds indicating
they would delay a major outlay, a figure which is thirteen percentage above their
older (50+) counterparts.

“It is positive to see consumers who are facing financial difficulty addressing their
problems and working to better manage their finances. Consumers who ignore these
issues run the risk of ending up with black marks on their credit file or as another
statistic on the consumer bankruptcy register,” said Ms Christian.

“However the latest survey also demonstrates the importance of credit providers
having access to as much information as possible so they can make appropriate
decisions about a consumer’s ability to manage credit.

“The Federal Government’s National Consumer Credit Protection Bill, which seeks to
protect consumers from financial difficulty is a positive move. However to enable
improvements in the credit application process lenders need access to more
information than is currently available under Australia’s credit reporting system. This
means reform should be a priority and it should coincide with the introduction of the
NCCP Bill.”

However some Australians will continue to stimulate the economy by spending in the
months ahead. Forty two percent of high income households indicate they will outlay
funds for a major purchase. Positively, a substantial proportion (seventy nine
percent) of this group intends to fund all or part of their purchase from their savings.
Credit card is the second most popular option at forty two percent and the third (at
twenty five percent) is the Commonwealth Government stimulus package. These
figures, combined with recent retail sales data (retail sales reached seven percent
growth in May 2009 just after the $900 stimulus package was released to many


Australians) indicate that that the initial wave of spending resulting from stimulus may
have peaked.

In addition a substantial proportion of high income households plan to apply for
additional credit during the September quarter. Forty two percent of Australians in
this group intend to apply for new credit – that is fifteen percentage points above the
expectations of their low income (up to $30,000) counterparts. New credit cards
(fourteen percent) and limit increases on their current card (seventeen percent) are in
highest demand for high income households.

In addition, eleven percent in this group intend to apply for a new home loan,
indicating that recent growth in this area (the number of new home loans in May 2009
climbed for the eighth successive month to reach the highest point since October
2007) may continue in the months ahead as those in a strong financial position take
advantage of low interest rates.

“It is clear that the road to recovery in Australia still has a way to go however it is
pleasing to see some signs of promise,” said Ms Christian.

“Some demographics are well placed to take advantage of the current economic
situation and are doing so by entering the housing market while interest rates are

“In another promising sign we are seeing people using their savings to pay for major
purchases – this may indicate a change in behaviour, with people less willing to take
on additional debt and more inclined to build up their savings. However we won’t
know if this behavioural shift is permanent or simply a temporary measure until the
economy has recovered and people are feeling more secure about finances.”

*This Newspoll study for Dun & Bradstreet was conducted online in June 2009 among 1203 adults aged
18-64 years nationally.

Media Notes

For further information please contact:
Nathan Williams – D&B Corporate Affairs
T: 07 3360 0635

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