CANBERRA, AAP – Confidence among Australians has suffered its biggest weekly drop since the early stages of the pandemic last year as the country suffers lockdowns and restrictions in trying to tame the virus.
The ANZ-Roy Morgan consumer confidence index tumbled 5.2 per cent, its sharpest weekly fall since late March 2020.
The fall follows the extension and tightening of the Sydney lockdown until July 30 and the fifth lockdown in Melbourne, which is now set to be longer than the originally planned five days.
Confidence declines were widespread, with Adelaide posting the biggest fall even before the South Australian government imposed a series of restrictions on Monday to control a virus outbreak.
The confidence survey was taken at the weekend.
ANZ head of economics David Plank said the sub-indices that capture economic conditions and whether it is time to buy a major household item are at their worst levels since early November 2020.
He said while this highlighted some renewed caution of households, levels are nowhere near the lows seen in the early stage of the pandemic.
Economists estimate the twin lockdowns in Australia’s two biggest cities could wipe up to $10 billion from growth and potentially result in an economic contraction in the September quarter.
The South Australian restrictions add to that deteriorating outlook.
Australian Retailers Association CEO Paul Zahra said the closure of non-essential retail is a devastating blow at short notice.
“We estimate $250 million worth of retail trade in South Australia is at risk due to the new restrictions that will be in place until Friday,” Mr Zahra said.
“This is particularly damaging for small businesses that will have to close.”
The grim outlook is in sharp contrast to the positive view on the economy Reserve Bank of Australia governor Philip Lowe was presenting after his monthly board meeting at the start of the month.
The RBA will release the minutes of the July 6 board meeting on Tuesday.
Given the coverage that meeting received following a rare media conference and a subsequent speech by Dr Lowe, the minutes were always unlikely to yield anything new, but now they have become even more dated.
At this month’s board meeting, RBA members agreed to keep the cash rate and its three-year bond yield target at a record low 0.1 per cent.
It also made adjustments to its bond-buying program, aimed at keeping market interest rates and borrowing rates low.
From September, the RBA will purchase $4 billion worth of government bonds a week, a reduction, or taper, from the current rate of $5 billion a week.
“The growing economic hit from the lockdowns raises the question of whether additional policy support will be enacted,” St George economist Matthew Bunny said.
“It is difficult to see how the RBA would continue with plans to taper if restrictions continue to drag on. It is even possible the RBA could increase the rate of bond purchases.”