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Consumer confidence up but clouds gather

Consumer confidence has climbed for a second week running as Australia’s coronavirus curve eases, though economists expects weak jobs data and poor business indicators to take an increasing toll.

The weekly ANZ-Roy Morgan Australian Consumer Confidence survey rose close to 9.0 per cent as improved coronavirus indicators and government stimulus packages helped the measure build on a jump of more than 10 per cent the week before.

However, confidence is still below the lows experienced during the global financial crisis and is expected to be tested in coming months by a stream of negative data.

ANZ chief economist David Plank said an early major hurdle would be the March unemployment figures on Thursday.

“We’ve already seen a taste of it this week, with the plunge in business confidence and conditions,” he said.

“March employment data … may deliver more bad news, though the fact the survey week for the report was in early March means it is likely to be some way short of the disastrous labour market data we unfortunately expect to see in coming months.”

The confidence survey, based on 1,492 interviews conducted online and over the telephone at the weekend, was completed before the International Monetary Fund announced it expected Australia to suffer its biggest economic blow since the Great Depression of the 1930s.

The IMF said it expected unemployment to remain high for at least two years beyond the coronavirus pandemic, with Australia to be among the bottom third of the world’s top 20 economies.

Unemployment is tipped to rise to an average of 7.6 per cent in 2020 and 8.9 per cent in 2021.

Treasurer Josh Frydenberg said the government had taken decisive action to protect Australians and the economy from the effects of the coronavirus pandemic.

The government has so far thrown $320 billion at the crisis, or 16.4 per cent of GDP.

People’s confidence about their financial condition gained 8.7 per cent at the weekend while the “future financial conditions” indicator rose 7.9 per cent.

“Current economic conditions” gained 6.3 per cent, building on the massive gain of 24.6 per cent in the previous reading.

“Future financial conditions” gained 11.8 per cent after being the only subcomponent that fell in the previous reading.

“Time to buy a major household item” gained 8.0 per cent and the four-week moving average for “inflation expectations” fell 0.1 percentage point to 4.0 per cent.

The weekly reading dipped to 3.8 per cent from 4.1 per cent.

Originally published as Consumer confidence up but clouds gather

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