Consumer confidence has bounced back to its pre-COVID-19 pandemic levels in June, with the easing of restrictions giving people something to be optimistic about.
The Westpac Consumer Sentiment index rose 6.3 percent to 93.7 in June – taking the index back towards the 100 mark, which signifies more optimists than pessimists about the economy – among the 1200 people surveyed in the first week of June.
Westpac Chief Economist Bill Evans says that after a 16.4 percent rebound in May the index has recovered all of the 20 percent fall when the pandemic exploded in March and April.
“Confidence has clearly been buoyed by Australia’s continued success in bringing the coronavirus under control, which has in turn allowed for a further easing in social restrictions,” he said.
“We have also seen more even confidence levels in the major states as restrictions begin to be eased extensively across the country.”
Evans said the consumer sentiment index is only two percent below the average in the preceding September to February period, as confidence was already weak before coronavirus shock.
He said any further strong gains in consumer confidence are unlikely due to the unemployment rate staying relatively high; and some virus restrictions staying in place.
“It would be surprising if the recent upward momentum continues and is able to sustain a stable level of confidence which is above that previous period,” he said.
On June 9, Treasury secretary Steven Kennedy told a parliamentary committee the unemployment rate is expected to be eight percent by September when the JobKeeper wage subsidy scheme is legislated to end.
Evans said intense pressure on family finances and concern about the near term outlook for the economy is likely to continue in the coming months, but optimism is expected to return over prospects for finances in the year ahead and the economy’s medium term outlook.
However, it’s not all doom-and-gloom as retail spending could bounce back quite soon.
There was a strong 10.1 percent gain on survey respondents saying it was the time to buy a major item, up from a 26.7 percent surge in May.
“Some of this is undoubtedly the direct impact of the coronavirus and social restrictions – consumer views on ‘shopping’ appear to be returning to normal although buyer sentiment is still a long way from pre-COVID levels,” Evans said.