Confidence deterioriates as Victorian COVID-19 cases rise

Confidence fell 4.6% last week with all sub-indices weakening.

‘Current finances’ (-2.2%) and ‘future finances’ (-1.9%) both fell for the second consecutive week.

Economic conditions deteriorated sharply, with ‘current economic conditions’ dropping 10.6% and ‘future economic conditions’ falling 5.2%.

Time to buy a household item’ fell by 4.9%, more than reversing last week’s gain. ‘Inflation expectations’ was stable at 3.2% (four-week moving average).

ANZ Senior Economist, Catherine Birch, commented:

“The surge in COVID-19 cases in Victoria has dented consumer confidence, which dropped 4.6% last week. This was the largest fall since late-March, when national new daily cases peaked. Confidence in ‘current economic conditions’ fell sharply, suggesting that households are worried about the prospect of a return to tighter lockdowns and the impact of a second wave on the economy.

Confidence around ‘financial conditions’ fell too and we are already seeing Victorians pull back on spending in the latest ANZ data. Unfortunately, new daily cases in Victoria jumped to 75 on Monday, the state’s fourth-highest daily total since the pandemic began. This a worrying sign for confidence and a setback for the recovery.”

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