Australia’s consumer confidence has taken a small hit across the country following the rapid spread of the Omicron variant of COVID-19.
The weekly ANZ Roy Morgan consumer confidence rating dropped by 2.4 points for the first week of the year, a week that usually sees a rise.
Consumer confidence fell particularly hard in South Australia (11.8 points), which was not hit as hard by the Delta variant of the novel coronavirus, but has been struggling with the new variant Omicron.
“Consistent with the drop in confidence, ANZ-observed spending is at its lowest level since the Delta lockdowns,” ANZ Head of Australian Economics David Plank said, referring to the week to Jan. 5.
The observed spending data found that spending in Sydney and Melbourne had fallen to near lockdown levels, with Sydney at its lowest level since COVID-19 began.
Spending in Queensland, South Australia, and Western Australia also fell sharply after the Christmas trading period.
However, confidence sub-index results for “current financial conditions” rose by 1.4 percent and “future financial conditions rose by 0.7 percent, suggesting that people are still happy with their financial conditions.
“This potentially sets things up for a rapid rebound once people are more confident about health outcomes,” Plank said.
Shoppers ride an escalator at Melbourne Central during the Boxing Day sales in Melbourne, Australia, on Dec. 26, 2021. (Diego Fedele/Getty Images)
Meanwhile, the Australian Bureau of Statistics (ABS) revealed that retail sales figures in November 2021 rose 7.3 percent, the fourth-strongest monthly rise on record, to $33.4 billion (US$24 billion).
The rise followed the easing of Delta COVID-19 restrictions, with all jurisdictions aside from the Northern Territory reaching record retail sales during the Black Friday shopping period.
Online spending remained high at 12.5 percent of total retail sales. But it was a fall of 13.2 percent from the previous month, reflecting the return to in-person shopping in November.
“Further easing of COVID-19 restrictions in the south-eastern states and territories has seen the retail industry recover all lost momentum caused by the Delta outbreak,” ABS Director of Quarterly Economy Wide Statistics Ben James said. “Victoria recorded the largest state rise, up 20 percent, reaching its highest level of the series.”
However, ANZ found that most of the post-Delta gains for retail spending had reversed in January due to staff shortages, isolation, and caution on going out due to Omicron (pdf).
The Australian Retail Association (ARA) said November results were incredibly strong as consumers took advantage of Black Friday sales. However, it noted that going forward, spending would likely slow, given the current impact of Omicron on businesses.
“We’ve entered new territory in the pandemic with Omicron decimating workforces and impacting supplies and deliveries of essential goods,” ARA CEO Paul Zahra said. “November was very different to what retailers are facing currently.”
An online poll by ARA, with over 162 respondents from Jan. 7 to 10, found that 76 percent of retailers had staff in isolation.
“We’ve entered an unprecedented staffing challenge as more people are infected with COVID than at any stage before in the pandemic,” Zahra said. “This builds on an existing skills crisis within the retail and hospitality sectors.”
Prior to the emergence of Omicron, ARA and Roy Morgan had forecasted that Australians would spend a record high of $21 billion (US$15 billion) in post-Christmas sales.
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