Consumers are regaining their mojo, but Australia on track for longest slump in nearly 40 years
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Australian consumer confidence is on the rise again but it’s unlikely to prevent a third quarter of negative growth.
The ANZ-Roy Morgan Consumer Confidence Index rose nearly 5 per cent in the last week.
Furthermore, all subindices notched up gains. Confidence surrounding current economic conditions was up 25 per cent in a fortnight having gained another 13.1 per cent in the last week.
ANZ head of Australian economics David Plank said these results, the strongest weekly gain for some time, were encouraging.
“The substantial decline in active cases in Melbourne and continued low numbers in Sydney have raised hopes that the pandemic can be contained without a broadening of lockdowns beyond those already in place,” he said.
A number of sectors on the ASX have noticed consumers gradually coming back in recent weeks.
Certain retailers are also weathering the COVID storm well, particularly stocks helping consumers complete their home projects.
It is all but certain that June-quarter figures, due out next Wednesday at 11.30am AEST, will show a deep recession. A Bloomberg survey of economists has forecast a 6 per cent drop.
While consumer confidence will boost GDP in the third quarter, economists are still expecting the September quarter to be negative.
Commonwealth Bank’s Stephen Halmarick earlier this week predicted a 0.7 per cent drop in the September quarter.
Although this is only slightly in the red, a third quarter of negative growth would make it Australia’s longest slump since 1982-83.
Despite the rise in consumer confidence, the labour market remains weak and Halmarick blamed the reimposition of some restrictions.
“A large number of people have, once again, found themselves without employment and have had to either start, or restart, receiving the JobSeeker payment,” he said.
Halmarick predicts the jobless rate is still to peak — at 9 per cent in the final months of this year — and remain elevated throughout 2021.
He also noted while incomes, at least in Commonwealth Bank accounts, were rising, much of this was being saved. The average total savings balance in bank accounts was 14 per cent higher than July last year.
GDP is not anticipated to return to pre-COVID levels until the second half of 2022 at the earliest.