$130bn JobKeeper package gives huge boost to consumer confidence

Scott Morrison’s $130bn JobKeeper package has provided the biggest weekly boost to consumer confidence on record.

Federal Treasurer Josh Frydenberg and Prime Minister Scott Morrison arrive to announce $130b wage subsidy package at a press conference in March. Picture: AAP

Scott Morrison’s $130bn JobKeeper package has provided the biggest weekly boost to consumer confidence on record, albeit from historical lows, the latest ANZ-Roy Morgan survey has shown.

The confidence index jumped 10 per cent over the week to 72 points – the largest increase since the survey went weekly in 2008.

ANZ head of Australian economics David Plank said the blockbuster move represented “a strong endorsement of the government’s massive wage subsidy package”.

“Better news about the flattening of the ‘pandemic curve’ may also have contributed,” Mr Plank said.

Finance Minister Mathias Cormann on Tuesday morning echoed the deputy chief medical officer Paul Kelly’s comment from the day before that the declining rate of new infections over the past week was “encouraging”.

“We're trending in the right direction,” Mr Cormann said.

While the JobKeeper program may have provided heart to many households fearing for the loss of their livelihoods amid the coronavirus-induced recession, the immediate outlook remains bleak.

Despite the weekend’s much more upbeat survey results, confidence as measured by the index remains at levels last seen in the 1990s recession, with almost daily announcements of major lay-offs from companies which have seen their income decimated by lockdown measures.

The weekend’s confidence reading was still below the four-week average of 77 points, and well under the average of 113 since 1990.

“Consumers can hardly be said to be cheerful or ready to spend,” Mr Plank said.

The subindex measuring sentiment around “current economic conditions’ surged 25 per cent, albeit to only 44 points – half what it was six weeks ago.

‘Current financial conditions’ gained 9 per cent, while future financial conditions rose 11 per cent. The question gauging whether it was ‘time to buy a major household item’ gained 18 per cent compared to a drop of 24 per cent fall in the previous week.

On Tuesday, separate ANZ figures showed a 10 per cent drop in the number of job ads in March, the largest fall since the GFC.

There were a total of 136,235 advertisements in the month, on a seasonally adjusted basis, 18 per cent down on a year before to the lowest level since 2004.

Economists expect the unemployment rate to peak between 8-10 per cent in the coming months as forced closures of non-essential businesses and social distancing measures are expected to spark the most severe downturn since the 1930s.

Two-thirds of businesses surveyed by the Australian Bureau of Statistics between March 30 and April 3 said their revenue or cash flow been reduced as a result of the health crisis.

The new ABS report said close to half had made changes to their workforce arrangements, whether it be changing staff work hours, allowing employees to work from home, or place workers on leave.