Consumer Sentiment Rebounds 16.4%, Close To Pre-COVID-19 Levels
The Westpac-Melbourne Institute Index of Consumer Sentiment improved by 16.4% in May to reach 88.1, up from the “extremely weak” 75.6 of April. All component indexes recorded further gains in June, with the largest improvements made in the ‘time to buy a major item’ category.
“Remarkably, consumer confidence is now back around pre-COVID levels, having recovered all of the extreme 20% drop seen when the pandemic exploded in March-April,” said Bill Evans, Chief Economist at Westpac.
Evidently, Australian consumers have been encouraged by the successful efforts to contain COVID-19, and the subsequent easing of restrictions.
The Westpac Consumer Sentiment index is now only 2% below the average over September 2019 to February 2020. However, it is also worth noting that consumer sentiment was on the weaker side prior to the COVID-19 crisis.
The ANZ-Roy Morgan Consumer Confidence survey, which is conducted weekly rather than monthly, fell by 1.3% this week, ending nine consecutive weeks of improvements.
“Last week’s fall in confidence can be seen as more of a consolidating move than weakness, as it has come after the most extended stretch of gains in the history of the weekly survey,” said David Plank, ANZ Head of Australian Economics. “Economic conditions and financial conditions were essentially flat in aggregate; a pleasing result given the news (with the publication of the Q1 GDP data) that Australia is almost certainly in a technical recession.”