Coronavirus: Omicron weighs on consumer confidence
Concerns that the fast-spreading Covid-19 strain could trigger renewed restrictions have emerged in the latest consumer data.
Fears that the fast spreading Omicron Covid-19 strain could trigger renewed restrictions in states only freshly released from the Delta lockdowns has weighed on household confidence ahead of the festive period.
Westpac’s consumer sentiment index eased by 1 per cent to a still upbeat 104 points in December, as large 4 per cent declines in NSW and Victoria were mostly offset by similar increases in Queensland and Western Australia.
As NSW recorded well over 1000 new Covid cases overnight for the first time in two months, the slight deterioration in sentiment revealed in Westpac’s latest survey sounded a warning that the emergence of Omicron risks undermining the post-Delta rebound.
The bank’s chief economist, Bill Evans, said “while high vaccination rates have allowed the ‘Delta states’ to reopen, there appears to be a heightened sensitivity to virus developments in those states where there is likely more concern about the newly emerging Omicron strain and the continued circulation of Covid locally”.
After splurging during the Black Friday sales period in late November, businesses and policymakers are banking on households being prepared to run down hundreds of billions in pandemic savings over the coming year, starting in the summer holiday period.
Deutsche Bank chief economist Phil Odonaghoe acknowledged the risk that Omicron might delay the hoped for post Delta snapback, “but early evidence suggests that Australia‘s world beating labour market recovery at the turn of 2021 is on track to be repeated at the turn of 2022”.
As Queensland, Tasmania and the Northern Territory reopened their borders, Scott Morrison this morning exhorted authorities to stay the course, saying “Omicron is in Australia and we’re going to live with this virus”.
“We’re not going to let it drag us back to where we’ve been,” the Prime Minister told 4BC radio in Brisbane. “We’ve got one of the highest vaccination rates in the world.”
“Yesterday, we had another bumper day in terms of our booster program. Almost 100,000 got their boosters yesterday, and we need people to keep going out and getting their boosters. It’s one of the key weapons we’ve got against Omicron, but we’ve got to keep moving forward,” he said.
Labour force statistics, to be revealed tomorrow, should show 200,000 jobs were created in November, according to consensus forecasts, as employers in locked-down jurisdictions brought staff back.
Besides the ever-present Covid issue, the Westpac survey also revealed that talk of spiralling inflation was spooking households.
In December last year only 5 per cent of respondents recalled any news on inflation, but this lifted to 21 per cent in the latest survey. What’s more, 71 per cent described the news on inflation bad, versus 56 per cent a year earlier who said it was good.
This had triggered 60 per cent of respondents to describe the news on rates as negative in the latest survey, versus the opposite 12 months earlier.
With home prices climbing by more than a fifth in the past year alone, only 7 per cent of respondents nominated real estate as the wisest place for savings – the lowest proportion in 25 years.
“We expect that this question largely reflects affordability concerns rather than expectations of capital gains,” Mr Evans said.
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