Australians continue to feel anxious as the COVID-19 pandemic sinks the economic outlook, in another worry for the Reserve Bank as it sits down for its monthly board meeting.
The latest ANZ-Roy Morgan weekly consumer confidence index fell for a sixth straight week, declining 0.4 per cent, to be at its lowest level since late April.
ANZ head of Australian economics David Plank warned the latest survey for last week does not capture the impact of the extended Melbourne lockdown announced on the weekend.
“Despite the decline seen since the onset of the second wave in Victoria, the severity of the fall has been less than in March – at least so far – suggesting Australians have become somewhat accustomed to the ‘new normal’,” Mr Plank said, releasing the survey on Tuesday.
Consumer confidence collapsed in March when the pandemic first hit Australia’s shores, but then slowly recovered during April and May as its impact initially proved less than feared.
Victorian Premier Daniel Andrews warned on Monday that a quarter of a million workers in his state could lose their job as a result of an extended and deeper lockdown in a further attempt to stop the spread of the coronavirus.
The central bank board will need to weigh up the impact of the restrictions in the nation’s second-largest state on the rest of the economy.
The Reserve Bank has been relatively upbeat about a gradual economic recovery.
Economists expect the Reserve Bank to leave the cash rate at 0.25 per cent for another month while maintaining its bond-buying program to ensure there is sufficient liquidity in the economy.
However, there has been some vague talk that it could cut the cash rate to 0.10 per cent in the face of a deterioration in the outlook caused by the second wave in Victoria.
“A possible surprise cut in the official cash rate to 0.10 per cent this week can’t be ruled out, given it was a possibility raised by Governor (Philip) Lowe in a recent speech,” BetaShares economist David Bassanese said.
Retail spending data will also to be released later on Tuesday and is expected to confirm recently released preliminary figures from the Australian Bureau of Statistics, with a 2.4 per cent rise in June.
This builds on the 16.9 per cent rebound in May, although the figures are now somewhat dated given events in Victoria.
Among Victoria’s latest restrictions, the retail sector – outside of supermarkets, grocery stores and bottle shops – will have to close doors and shift to online shopping only.