The relief of getting through the dark days of the coronavirus pandemic has seen confidence among Australians soar to a seven-year high.
And encouragingly for retailers, this buoyant mood suggests the nation is preparing for a “normal” Christmas.
“We’re bounding back from the terrible lows that we saw as we moved through the worst part of the COVID-19 recession,” Prime Minister Scott Morrison told parliament on Wednesday.
Optimists are again ruling the roost, according to the Westpac-Melbourne Institute consumer sentiment survey index which rose 2.5 per cent in November to 107.7, building on the 11.9 per cent spike in the previous month.
The sentiment index is now 13 per cent above the average over the six months before the economy-wide shutdown in March.
“This is another strong result,” Westpac chief economists Bill Evans said.
“The most important developments since last month have been the significant unwinding of restrictions across Victoria and the reopening of the Victoria-NSW border.”
The Reserve Bank also made modest cuts to interest rates during the November 2-6 survey period, while reiterating a commitment to keep rates at record lows for at least three years.
“Aussie consumers are feeling more chipper,” Commonwealth Securities chief economist Craig James said.
“(They) are looking at the situation in other parts of the globe and understandably feeling good about where we stand down under.”
Victoria’s run of zero new infections extended to 12 days as NSW notched a fourth day without community spread.
In stark contrast, the US is recording more than 100,000 new cases a day.
The latest Westpac survey predates global pharmaceutical giant Pfizer’s coronavirus vaccine breakthrough, which has sent share markets into a frenzy, suggesting confidence could improve even further from both a health and an investment perspective.
Mr Morrison said the government’s own vaccine and health strategy is critical to Australia’s economic growth come back and success.
“We are leaving no stone unturned in ensuring the greatest Australian come back that this country has seen since the Great Depression,” he said.
The survey’s ‘time to buy a major item’ sub-index jumped 6.7 per cent In November to its highest level since August last year.
“This will be a particularly welcome sign for Australia’s retailers heading into the critical Christmas high season,” Mr Evans said.
Every November, survey respondents are asked whether they plan to spend more or less on Christmas than the previous year.
For 2020, 11.5 per cent expect to spend more while 32.3 per cent expect to spend less.
However, the net balance of minus 20.8 per cent is around the long run average since the question was first posed in 2009.
“Given the high degree of uncertainty this Christmas and the headwinds from the high unemployment rate, it is very encouraging sign that Australians are planning for a ‘normal’ Christmas,” Mr Evans said.