The Melbourne Cup may stop the nation, but the economic impact of the event races ahead for many industries.
Consumer spending on fashion, gambling, food and entertainment is forecast to be up this year, according to industry analysts IBISWorld.
IBISWorld predicted in October that positive post-election consumer confidence will see Melbourne Cup Carnival spending increase by 3.5% this year to $455.5 million.
It expects fashion to be the fastest growing expenditure segment, increasing 13.9% on 2012 spending to $53.2 million.
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The other key industry set to benefit is betting, with punters attending the Melbourne Cup Carnival expected to boost gambling spend by 12.4% to $68.1 million this year. Overall betting on the event is forecast to reach $806 million, an increase of 7.4% on 2012 figures.
Trackside food and beverage spending is predicted to lift by 3.3% to $167.9 million.
The Carnival reaches its peak today, with the Melbourne Cup horse race. Other key days include Derby Day (last Saturday), Oaks Day on Thursday November 7 and Stakes Day on Saturday November 9.
The Victorian Racing Club, organisers of the Melbourne Cup Carnival, released a statement with their analysis of the economic impact of the 2012 event related to tourism.
It reported that the Flemington-based event generated a value-added contribution to Victoria’s gross state product of more than $176.58 million.
This figure quantifies the money spent through Victorian businesses by out-of-state visitors specifically on purchases for the four race days.
The VRC said the Victorian economy benefited from $366.15 million in financial stimulus (gross economic benefit) generated by the Melbourne Cup Carnival, an increase of 4.9% from 2011.
It said that nationally, the event generated an economic benefit of more than $751 million in 2012, an increase of 0.7 per cent compared to 2011.
However, while some industries, particularly in Victoria, are set to profit, others may suffer due to low workplace productivity as people stop to watch the race.
AMP Capital Investors head of investment strategy and chief economist Shane Oliver did an on-the-spot calculation for SmartCompany. He suggested that if employees around the nation cease to work for half a day after watching the race, it could lead to a 0.2% drop in GDP.
“The losers are in the other states [not Victoria] where it is not a public holiday, but people may not do any work after lunch time,” he says. “Chunks of people leave work after the race.”
He speculated that office workers may be the prime culprits, as the nature of factory and services industries mean it is harder to step away from tasks.
“They may have bosses more likely to encourage them to get back to work,” he says.
Oliver says the counter argument is that the race brings a boost to consumer spending, is a great benefit to the horse racing industry and related services.
Another “offsetting positive” is the boost to the national psyche.
“You can do the maths… but a day like this can boost the national psyche and feelings of wellbeing,” he says, referring to other national sporting events that unite people.
Pitcher Partners partner Adrian Clerici agrees that the impact of the event on productivity can be countered by the chance for people to take a break, or if at work, to stop and socialise with co-workers for the afternoon.
“I think the idea of the impact of people slacking off is overplayed,” he says.
“With the digital world people are doing work at all times at home.”
And what will the economists will be up to?
“We will be watching the RBA (Reserve Bank of Australia) this afternoon – first Tuesday of the month is rate day,” says Oliver.
However, Clerici will be enjoying the race, not the rates.
“We don’t expect any rate change today…there hasn’t been one on Melbourne Cup Day for around five years,” he says.