Westpac: Consumer confidence falls as COVID causes new lockdown fear
Consumer confidence has fallen, according to Westpac, as the economy faces a second lockdown due to COVID-19.
Latest Westpac research shows consumer confidence has dropped, signalling fresh fears of a second COVID-19 wave that will batter and bruise an early economic recovery.
The Westpac-Melbourne Institute consumer sentiment index fell 6.1 per cent to 87.9 points, as a coronavirus resurgence has sparked concern that lockdown measures could be reimposed across the country.
The drop reverses the previous month’s gain that showed early signs of an economic uplift. It is also a reminder of the extreme lows in April that pushed the leading index to 75 points.
Westpac noted the survey covered the week of lockdowns announced in Victoria but missed the significant cluster outbreaks popping up in New South Wales.
Westpac chief economist Bill Evans said the index was still 16 per cent above the extreme lows faced during the initial lockdown period, with the drop predominantly linked to the Victorian outbreak.
“Sentiment has been rocked by the resurgence in coronavirus cases over the last month,” Mr Evans said.
“There looks to have been a substantial loss of confidence around the ability to contain the virus permanently, limiting the extent to which the economy can return to business as usual.”
Victoria had the largest fall in consumer confidence, with the state index plunging 10.4 per cent, while all other states and territories had a milder decline at a combined 4.5 per cent.
The 12-month economic outlook recorded the biggest decline, falling 14 per cent over the month.
Mr Evans flagged the renewed outbreak pointed to a slower and more difficult path to economic recovery, particularly for the foreign education, hospitality and tourism sectors that could face longer-lasting restrictions compared with other industry sectors.
Job loss concerns also escalated in July, with unemployment expectations surging 12.1 per cent to an index position of 142.6 points, reversing most of the 19.5 per cent improvement experienced in the May-June period.
Westpac flagged the September cut-off to JobKeeper and larger JobSeeker payment had likely impacted sentiment.
Major bank flags big risk in rate cut
Australia’s biggest bank says there may be some brief relief for those priced out of owning a home, but there could be a brutal side effect to cutting rates.
ASX 200 hammered on Trump tariffs
Nearly $50bn was wiped off the Australian sharemarket on Monday as fears of a trade war led by US President Donald Trump tariffs ripped through the local market.
Grim truth about Aussie rate cut
Mortgage holders need more than one rate cut to start feeling relief, with only about 53,000 Aussies likely to move away from “at risk” should the RBA cut rates in February.