VIC COVID Cases Wipe June’s Gains In Consumer Sentiment
The Westpac-Melbourne Institute Index of Consumer Sentiment fell 6.1% to 87.9 in July, reversing all of last month’s impressive gain. This takes the consumer sentiment index back to the weak levels seen in May, but still leaves it 16% above April’s extreme low of 75.
“The timing of the survey is relevant. It covered the week in which the lock down was announced for Melbourne but the survey closed before the news of a significant cluster was reported for Sydney,” said Bill Evans, Chief Economist at Westpac. “Sentiment has been rocked by the resurgence in Coronavirus cases over the last month.”
State variations in confidence demonstrate how closely tied consumer sentiment is with COVID-19 cases. Victoria’s sentiment index plunged 10.4% in July but sentiment across the rest of the nation showed much milder declines (down 4.5% on a combined basis).
“While milder, the weakness in other states is also likely to be linked to the outbreak in Victoria, reflecting concerns about the virus spreading interstate and spill-over effects on the wider economy,” said Evans.
The weekly ANZ-Roy Morgan Consumer Confidence index dropped by 0.5% last week, its third straight weekly decline.
“The deteriorating conditions in Melbourne and the renewed lockdown are most likely the primary contributor to the turn in sentiment,” said David Plank, ANZ Head of Australian Economics.
“The biggest fall has been in ‘current economic’ conditions, which are down around 15% over this period. In contrast, sentiment toward personal finances is close to unchanged, highlighting the role that the massive fiscal stimulus has played in shielding people from the direct fall-out of the economic slump triggered by the health response to the pandemic.”