Coronavirus: Consumer confidence plunges on fears of worse to come

Consumer confidence is tipped to plummet following new outbreaks in Melbourne and Sydney.

Consumer confidence is tipped to plummet further following the lockdown of more than five million Victorians and amid fresh cases of coronavirus in Sydney.

Westpac’s monthly confidence gauge sank 6 per cent in July compared to June, the bank said on Wednesday, reversing the previous month’s gains.

“Sentiment has been rocked by the resurgence in coronavirus cases over the past month,” said chief economist Bill Evans.

“It is of some concern that the survey predates the news of a significant cluster of cases in Sydney which emerged last weekend — a day after the end of the survey,” he added, alluding to the possibility of further declines.

A spike in new coronavirus cases in Melbourne prompted the Victorian government to impose a six-week lockdown last week, while other states closed their borders with Victoria.

“Whereas previously respondents were confident that the damage from the virus would be short-lived, the setback over the past month raises significant questions,” 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.”

The fall in July nevertheless left the closely watched confidence index, which is based on a survey of 1200 adults, 16 per cent higher than in April, which was the lowest reading in its history.

Unsurprisingly, the biggest fall in confidence was in Victoria, down more than 10 per cent.

The consumer survey points to a potential decline in business confidence in July as well.