- The nation’s confidence has been shaken once again by the prospect of a second wave of lockdowns.
- Westpac’s consumer confidence index shows the country has regressed back to how it felt in May – albeit still higher than its April lows.
- It’s expected a certain level of self-regulation will now take place in cities like Sydney, where people are already growing anxious about moving around.
- Visit Business Insider Australia’s homepage for more stories.
Confidence that the Australian economy was over the worst of the coronavirus took months to build, and just days to destroy.
As Victoria lurches through another six-week lockdown, the optimism that had grown since restrictions began to lift have been dealt a huge blow, according to the Westpac consumer confidence survey on Wednesday.
It shows confidence is still negative, falling by 6.1% nationwide in July as anxiety again grows around lockdowns.
“The drop in confidence reverses all of last month’s impressive gain, taking the index back to the weak levels seen in May but still leaving it 16% above April’s extreme low of 75,” Westpac chief economist Bill Evans said.
It was ultimately throttled by Victoria’s ongoing outbreak, which wiped 10.4% off the state’s sentiment index.
“[There] looks to have been a substantial loss of confidence around the ability to contain the virus permanently, limiting the extent to which the economy can return to business as usual,” Evans said.
“Certainly, the renewed outbreak points to a slower and more difficult path ahead for the foreign education, hospitality and tourism sectors all of which may see longer lasting restrictions even if the latest outbreak is successfully contained.”
There was again escalating concerns around job losses, as Australians reported a surge in unemployment expectations.
“Consumers are most worried about the economic outlook and the impact to income,” AMP Capital senior economist Diana Mousina said, noting confidence remains well below its long-term average.
“Confidence around household personal finances over the next 12 months has weakened by 6.7%, economic conditions over the next 12 months has fallen by 14% and economic conditions over the next 5 years have declined by 10.3%.”
As case numbers climb in Victoria, and restrictions return, Australians are expected to move about less and spend differently as a result. Mousina says Sydneysiders appear to be the first group to begin preemptively staying home.
“Consumer confidence is likely to track changes in mobility from here given the concern households have around a second-wave of COVID-19 spreading across Australia – expect more downside to confidence readings for now,” she said.
As anxiety grows, it could set off a second wave of economic hurt as Australians again tighten their purse strings.
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