Declining rates of coronavirus infections and the return to work of thousands of Australians has ended a seven-week slide in consumer confidence.
The weekly ANZ-Roy Morgan consumer confidence index gained 2.4 per cent, aided by a 10.6 per cent increase in people’s views on “current” economic conditions.
However, they were not so upbeat about their own finances, with confidence in this area falling 1.9 per cent.
“Confidence strengthened last week as the rate of growth in COVID-19 cases declined in Melbourne and Sydney,” ANZ head of Australian economics David Plank said on Tuesday.
He said data last week showing another 114,700 people had secured a job in July may have also helped to buck the seven-week continuous decline in the index.
“With confidence remaining at a level that is well below average we aren’t getting too carried away by the positive result,” Mr Plank said.
“Consumers are still very cautious about the outlook.”
Confidence among Melbourne consumers lifted the most in the past week but it still remains the lowest of any of the other major capital cities.
A separate survey showed Victorian businesses were already pretty pessimistic heading into the harsh stage four lockdown, with more than half predicting a decrease in profitability over the next three months.
The August Sensis Business Index survey, conducted just as Melbourne went into lockdown, showed 54 per cent expecting profitability to decrease.
That compares with Sydney, where only about a quarter expect a decline in profits and almost one in three expect to make a profit.
Sensis chief executive John Allan said the survey showed just how hard some industries had been affected.
“There are some sectors that were less affected but the hospitality and accommodation sectors were virtually shut overnight,” Mr Allan said.
“And that continues to be the case in Victoria.”
The survey of 1000 businesses from across the country viewed the national economy performing worse than individual state economies.
Almost two-thirds of firms believe the national economy will be worse in 12 months, while they were slightly more positive about their states at 57 per cent.
Not helping the grim mood, more than one in four businesses have been knocked back trying to get finance during the past three months.
The figure was worse for businesses in regional towns, where more than a third failed to secure a loan.
Nearly two in five businesses believe it is more difficult to get a loan since the start of the pandemic.
The Reserve Bank will release the minutes from its August 4 board meeting later on Tuesday.