The Westpac-Melbourne Institute Consumer Sentiment Index rose 1.5% in July, although the survey was taken before the tightening of restrictions in Sydney and regional NSW. Confidence has held up overall despite a sharp fall in NSW as other states, Victoria and Western Australia, recorded strong bounce-backs from earlier Covid-related disruptions, Westpac chief economist, Bill Evans said.
“The main takeaway is that concerns around the current virus outbreak and associated restrictions in NSW are not spilling over to the rest of the country. This contrasts with Victoria’s ‘second wave’ outbreak in August last year which weighed heavily on sentiment across the rest of the country,” he said.
While confidence in NSW remained steady throughout April to June, it reversed in July, following the sharp rise in Covid cases and the associated move to the lockdown in Sydney that hit NSW consumer confidence hard, Evans said. “However, this was fully offset by strong recoveries in Victoria (up 15%) and Western Australia (up 11.5%) as both states came out of lockdown.
“The good news is that, despite the fall, confidence is still at relatively firm levels with indexes for Sydney and NSW still above their long-term averages. It seems likely that at the time of the survey many respondents may have been expecting a shorter lockdown period than is now being mooted, which suggests confidence in Sydney and NSW could fall.”
Buyer sentiment posted a solid net gain with retail prospects particularly buoyant in Victoria where the ‘time to buy a major item’ sub-index surged 25% but fell 7.8% in NSW.
Evans said the rescue package for NSW has been generally well-received, although it appears less generous and more complicated than JobKeeper.