Victoria virus recovery lifts business and consumer mood

Businesses are the most confident they have been since mid-2019 and consumer sentiment lifted to its highest level since the pandemic began.

People took to the streets last month as Melbourne emerged from its lockdown, buoying the mood among business and consumers alike. Picture: Getty Images

Businesses are the most confident they have been since mid-2019 and consumer sentiment has lifted to its highest level since the pandemic began, as Victorian firms and households cheer the end of Melbourne’s lockdown.

NAB’s monthly business survey showed the confidence index lifted nine points to five points in October — the highest in more than a year and above the zero “neutral” level, indicating more optimists than pessimists.

The business survey is the latest evidence that Australia’s post-COVID recovery has taken hold, although in an environment of incredible uncertainty as the world continues to struggle to suppress the pandemic.

NAB chief economist Alan Oster said “the improvement in confidence is encouraging but remains fragile, and it will likely remain that way until a vaccine is available”. “In the interim, confidence will be an important factor for how quickly businesses ­expand employment and capex as ­demand normalises,” he said.

The upbeat business survey followed news that ANZ-Roy Morgan’s weekly confidence measure lifted to an eight-month high and above the neutral level for the first time since the health crisis struck.

The consumer sentiment index lifted 3.2 per cent to 103.1 in a survey conducted last weekend, the report showed.

There was a 10 per cent surge in the measure gauging whether it was “time to buy a household item”, which ANZ head of Australian economics David Plank said “could signal a buoyant Christmas shopping period”.

Mr Plank added that “lower interest rates and the RBA’s commitment to support employment could have been triggers for the gain”.

Still, unlike businesses, sentiment among consumers as measured by ANZ remains about 10 per cent below its long-term average of 112 points. The measure reached an all-time low of about 65 points during the depths of the health crisis.

NAB’s business survey showed the corporate mood lifted across the eastern states — led by Victoria — but declined in Western Australia, Tasmania and South Australia. By industry, the sentiment gains were led by recreational and personal services, and construction.