Consumer confidence continues its descent

Consumer confidence dropped 3.5 per cent last week, as Sydney, Victoria and South Australia remained under a lockdown, with cases rising in Sydney despite the tightened restrictions.

All the subindices registered a fall, but the ones that capture current conditions fell furthest. Most notably, ‘current economic conditions’ dropped 6 per cent. ‘Current financial conditions’ declined 3.4 per cent.

‘Future economic conditions’ lost a more modest 0.5 per cent. ‘Future financial conditions’ softened 1.2 per cent.

‘Time to buy a major household item’ dropped 6.6 per cent to its lowest level since mid-October 2020. ‘Weekly inflation expectations’ increased by 0.1ppt to 4.3 per cent, its highest level since late March 2020, with the four-week moving average steady at 4.1 per cent.

“Consumer confidence fell by 3.5 per cent last week, to its lowest since early November 2020 right after Victoria’s long second lockdown.” ANZ Head of Australian Economics, David Plank said.

“Confidence fell in both Sydney (-2.2 per cent) and Melbourne (-6.4 per cent), but rose in Adelaide a touch (0.5 per cent). Even with a much higher case load and longer lockdown, confidence in Sydney is a bit higher than in Melbourne. We would note that even during Melbourne’s long lockdown in 2020 confidence levels in the two cities remained close.”

“Sentiment declined in Brisbane (-6.1 per cent) and Perth (-4.6 per cent) despite the absence of lockdowns in those cities, further highlighting the interrelated nature of sentiment across Australia. Confidence remains well above the lows seen in the early stages of the pandemic, suggesting the economic hit from the current lockdowns will be less than that seen in the second quarter of 2020.”

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