CANBERRA, AAP – Rising coronavirus vaccination rates and an additional supply of mRNA doses have given a boost to consumer confidence, a positive sign for retailers when lockdowns are eased in NSW and Victoria.
The Westpac-Melbourne Institute consumer sentiment index rose two per cent in September to stand comfortably above levels seen in the five years prior to the COVID-19 pandemic.
“The resilience of consumer sentiment in a period when Australia’s two major cities have been locked down and the economy has been contracting is truly remarkable,” Westpac chief economist Bill Evans said.
“The improving vaccine situation appears to be a key factor behind these results.”
Confidence among respondents who have had at least one jab (57 per cent) or those that are unvaccinated but willing to get a jab (27 per cent), was much higher than the 16 per cent who are unwilling or undecided to be inoculated.
“That strongly suggests recent announcements of the lift in supply of Pfizer and Moderna vaccines and the rollout to younger age groups have been big positives,” Mr Evans said.
Consumer confidence is a pointer to future household spending and suggests the economy is primed to recover after an expected contraction in the September quarter due to the impact of the Delta variant outbreak.
That is certainly the view of Reserve Bank of Australia governor Philip Lowe, who says while lockdowns have been a major setback for the economy, it has delayed rather derailed the recovery.
Treasurer Josh Frydenberg agrees with this outlook.
“We will see in the September quarter the economy contract, but we also know from our previous response to the pandemic that we went through last year it bounces back pretty quickly,” he told the Nine Network on Wednesday.
However, Dr Lowe warned the unemployment rate could reach the “high fives” for a short period of time after reaching a 13-year low of 4.6 per cent in July.
Economists expect Thursday’s Australian Bureau of Statistics labour force report for August to show the jobless rate has risen to five per cent.
But in another positive sign, new home sales rose 5.8 per cent in August, even without the assistance of the federal government’s successful HomeBuilder program.
“The strength in new home sales in recent months indicates that the boom in detached home building will continue to create strong employment opportunities into the second half of 2022,” Housing Industry Association economist Tom Devitt said.
However, a report by digital credit reporting agency CreditorWatch also suggests not all is rosy among the business community.
Its latest business risk review for August showed credit enquiries have dropped 19 per cent, the first negative result since September last year, while the number of court cases involving firms jumped 35 per cent.
CreditorWatch chief executive Patrick Coghlan said despite state government support packages, it was obvious that continuing uncertainty about the path out of lockdowns had affected business confidence.
“Many businesses are struggling to trade through lockdowns or are unable to trade at all,” Mr Coghlan said.
“Unfortunately, some businesses are in a position where they simply won’t be able to reopen at all. This is a very concerning scenario for the Australian economy.”