Consumer confidence received a much needed boost from last Friday’s three-step plan from the national cabinet to lift coronavirus-related restrictions in the months ahead.
Whether that translates into a renewed retail spending spree remains to be seen with wage growth remaining slow, and likely to get even worse as unemployment spikes to levels not seen since the 1990s recession.
Consumer confidence, as measured by the monthly Westpac-Melbourne Institute survey, jumped 16.4 per cent for May, recapturing much of the 17.7 per cent slump in April.
“The despair apparent a month ago, when Australians were bracing for a severe outbreak and prolonged shutdown, has lifted materially but consumers are justifiably cautious,” Westpac chief economist Bill Evans said releasing the confidence data on Wednesday.
Other new data showed annual wages growth eased heading into the pandemic, in tandem with “relatively stable but slow economic growth”, Australian Bureau of Statistics chief economist Bruce Hockman said.
The wage price index – a key measure used by both the Reserve Bank and Treasury – grew by 0.5 per cent in the March quarter with the annual rate slipping to 2.1 per cent from 2.2 per cent earlier.
This remains well below the long-run average of three per cent.
The data pre-dates the lockdowns across the nation in attempt to shield Australians from the worst of the COVID-19 pandemic.
Tuesday’s much-anticipated economic statement from Treasurer Josh Frydenberg was seen as largely a re-run of his previous thoughts on a COVID-19 hit economy and was overshadowed by a coughing fit, which resulted in him being tested for the virus, and found to be negative.
“Yesterday I was tested for COVID-19 out of an abundance of caution on the advice of the Deputy Chief Medical Officer. This morning I received the result of the test which was negative,” he tweeted on Wednesday.
Even so, the economic figures in coming months are likely to be horrendous, with a spike in the unemployment rate to 10 per cent, coupled with a 10 per cent slump in economic growth.
The latest jobless figures will be released on Thursday.
The economy is expected to face a $50 billion hit in the June quarter.
‘”We were concerned that the treasurer yesterday really didn’t outline any plans for jobs and the economy coming out of this (crisis),” ACTU president Michele O’Neil told ABC radio.
She is calling for two million new permanent jobs to be created and a halving of the number of insecure jobs, saying the nation went into the crisis with “some pretty serious fault lines in our labour market”.
Business Council of Australia chief executive Jennifer Westacott agreed that employment must be the focus, but said that involves an improvement in the skills system.
“It’s has been wanting for a very long time,” she told the ABC radio panel discussion.
“It takes too long to get qualifications, too long to get skilled up, so that is one of the things I’d like to see, absolutely, at the top of the list.”