CANBERRA, AAP – Hefty job losses resulting from lengthy coronavirus lockdowns in NSW and Victoria have taken their toll on consumer confidence.
While the weekly ANZ-Roy Morgan consumer confidence index barely moved nationally, up just 0.2 per cent, sentiment tumbled 4.9 per cent in NSW and by 1.1 per cent in Victoria.
Figures last week showed employment dropped by 146,300 jobs as a result of lockdowns in the nation’s two biggest states.
In contrast, confidence – a pointer to future household spending – jumped 7.3 per cent in Queensland and 6.7 per cent in South Australia.
“Falling COVID case numbers in NSW, plus Victoria’s plan for opening may boost confidence over the coming week,” ANZ head of Australian economics David Plank said.
The latest survey was taken at the weekend, so it would not have gained the full impact of the Victorian government’s lockdown exit plan announced on Sunday afternoon.
However, rising petrol prices appear to fuelling consumers concerns about the inflation outlook.
The survey’s inflation expectations component rose 0.2 per cent and back to a near three-year high of 4.7 per cent seen earlier this month.
The national average for petrol prices struck a 35-month high last week against the backdrop of rising international oil prices.
The Reserve Bank of Australia will release the minutes of its September 7 board meeting on Tuesday, although it is unlikely to provide any fresh revelations given a wide-ranging speech by governor Philip Lowe last week.
In that address, Dr Lowe warned the economy could contract by at least two per cent in the September quarter as a result of COVID lockdowns.
While this is a major setback, he believes it will be only temporary and expects the economy to be growing again in the December quarter, with the recovery continuing into 2022.
RBC Capital markets chief economist Su-Lin Ong is forecasting a 3.4 per cent contraction in the September quarter and only a partial 1.8 per cent recovery in the December quarter.
Unlike the RBA, Ms Ong is not expecting the quick bounce back that has been the feature of previous lockdowns over the past 12 months.
She says this reflects the lack of a return to zero COVID-19 cases and accompanying caution among states, ongoing restrictions of some sort and a greater toll on Victorian businesses – especially small and medium-sized enterprises – from multiple and extended lockdowns.
“At this juncture, we would not alter our forecasts given multiple uncertainties, including the actual execution of exit from lockdown,” she said.