Vaccines fuel ‘remarkable’ lift in consumer confidence: Westpac
A new survey reveals a massive divide in confidence between the vaccinated and those waiting for a Covid jab, and those holding out.
Anti-vaxxers and those unable to get the jab are the only group who say they are gloomy about the outlook for the economy and their finances, as Westpac’s latest survey revealed climbing vaccination rates drove a “truly remarkable” increase in consumer confidence in September.
The Westpac-Melbourne Institute consumer sentiment index defied the pressure of lockdowns in Sydney, Melbourne and the ACT, lifting by 2 per cent from 104.1 points in August, to 106.2 points this month – comfortably above the five-year average leading into the pandemic.
A reading of above 100 signals that optimists outweigh pessimists.
Westpac chief economist Bill Evans said: “The resilience of consumer sentiment in a period when Australia’s two major cities have been locked down and the economy has been contracting is truly remarkable.”
Mr Evans ascribed this resilience to the pace of the vaccination program, with households becoming increasingly optimistic as inoculation rates climb rapidly towards the 70-80 per cent Doherty thresholds.
The confidence gauge among the 57 per cent of respondents who had received at least one jab was at 103.7 points.
The contrast with those who had not received the jab and were unwilling to get one was stark: confidence in this group lagged at 90 points. It was the only segment of respondents where pessimists outnumbered optimists.
Sentiment among those who were yet to receive a vaccine but were keen to do so was at a lofty 121.6 points.
Mr Evans said the result strongly suggested that recent announcements of the lift in supply of Pfizer and Moderna vaccines and the rollout to younger age groups had been “big positives”.
The strongest gains in sentiment were in the younger age groups which, since the last August survey, had received the green light to receive the vaccine. Westpac’s index surged 12 per cent to 113.3 points in respondents aged 18-24 years, and jumped 6 per cent to 119 points among 25 to 34-year-olds.
Mr Evans said: “The clear theme from this survey is that consumers are looking through current lockdown disruptions to a sustained improvement once vaccinations reach levels that allow for a reopening.
“This contrasts starkly with a year ago, when Victoria was stuck in an extended lockdown while other states feared similar outbreaks, signalling no real prospects for a sustained return to normality. In August last year the national index stood at 79.5, even though only Victoria was in lockdown at the time.”
Remarkably, consumers in September were more confident than they were in June, before Delta restrictions forced more than half the population to stay at home and triggered hundreds of thousands of workers to be stood down.
Confidence in NSW jumped by 5.3 per cent in the month to 106.4 points, and was steady at 104.1 in Victoria, despite that state going into lockdown in August.
While consumers in NSW and Victoria have been cheered by climbing vaccination rates, the boost to confidence from actually exiting lockdowns was displayed in Queensland, where the sentiment gauge jumped 8.4 per cent to 111.6 points.
A more resilient consumer will please policymakers who are counting on consumption to drive a bounce in economic activity once restrictions are lifted later this year.
The NSW government has set a tentative target of October 18 for the state to come out of lockdown, with bars, restaurants and other retail to recommence trade for fully vaccinated individuals.
Victorian Premier Daniel Andrews is also on Sunday set to unveil his state’s road map out of lockdown.
Reserve Bank governor Philip Lowe in a speech on Tuesday said the economy would “contract significantly” over the three months to September, but that vaccinations provided “a clear path out of the current difficulties” and that the nation would “return to a stronger economy next year”.
“Delta is delaying progress but it is not expected to derail our resilient economy,” Dr Lowe said.
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