Consumer confidence stage full recovery

Jason Cadden
(Australian Associated Press)

 

Consumer confidence has bounced back to its pre-coronavirus pandemic levels in June, with the easing of restrictions giving people something to be optimistic about.

The Westpac Consumer Sentiment index rose 6.3 per cent to 102.1 in May – taking the index back above 100, meaning there were 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 per cent rebound in May the index has recovered all of the 20 per cent 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.”

Mr Evans said the consumer sentiment index is only two per cent 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 coronavirus 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 Tuesday, Treasury secretary Steven Kennedy told a parliamentary committee the unemployment rate is expected to be eight per cent by September when the JobKeeper wage subsidy scheme is legislated to end.

Mr 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.

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