Consumer confidence is on an 8-week winning streak, but long-term concerns linger
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Consumer confidence has climbed for the eighth week in a row, according to ANZ-Roy Morgan data.
By late March, Australia had seen the peak of infections, the bottom of the market plunge and the worst of toilet paper hoarding.
Since then the index is up 42 per cent in conjunction with the curve flattening and lockdown conditions gradually being eased.
“Government measures and signs that the job market is stabilising seem to be playing a key part in the recovery of the index,” ANZ head of economics David Plank said.
Additionally, “time to buy a major household item” rose another 2.5 per cent, inevitably strengthened by retailers re-opening their doors.
While people’s confidence about their current finances declined 1.8 per cent, confidence in future finances rose by 3.2 per cent.
However, the survey was not all good news. Consumer expectations about Australia’s future economic outlook fell.
This sub index plunged in March and gradually recovered, but saw a dip of 2.4 per cent in the past week.
Plank credited this to trade concerns between Australia and China and the introduction of an 80 per cent tariff on Australian barley.
Also concerning consumers is Fitch’s warning about Australia’s AAA credit rating. The rating agency cut the outlook to negative last week.
Fitch warned of the impact government stimulus would have on the government’s debt levels, with gross debt expected to rise from 41.9 per cent to 58.2 per cent by June 2021.
The ratings agency also flagged concerns about reduced business sentiment and investment due to lockdown measures.
However, Fitch reaffirmed Australia’s economy was still AAA worthy for the time being. It attributed the current rating to the country’s strong macroeconomic policy, which had supported a long record of stable economic growth prior to the pandemic.