Consumers key to driving growth: Westpac

Consumer confidence has bloomed to an 11-year high, despite the unwinding of key government support measures and disappointing progress on the COVID-19 vaccine rollout.

The April Westpac-Melbourne Institute consumer sentiment survey shows confidence rose 6.2 per cent to the highest level since August 2010 – when the post-global financial crisis rebound and mining boom were in full swing.

“This is an extraordinary result,” Westpac chief economist Bill Evans said on Wednesday.

“The survey continues to signal that the consumer will be the key driver of above-trend growth in 2021.”

Mr Evans was ready for a small pullback in confidence following the unwinding of the JobKeeper wages subsidy program late last month.

There has also been disappointing progress in the vaccine rollout, compounded by health expert advice against giving the AstraZeneca vaccine to people aged under 50 due to the risk of blood clotting.

“Yet households appear to be resilient,” Mr Evans said.

The strong performance of the labour market and increasingly strong demand for workers, as well as a booming house market, were seen as factors lifting the mood of the nation.

The National Australia Bank’s monthly business survey released on Tuesday also showed conditions were upbeat in March, touching a record high.

Business confidence eased slightly, but remained well above average, and strong forward orders pointed to ongoing strength in activity, even without JobKeeper.

The end of JobKeeper has raised concerns about the impact on businesses and the labour market.

Treasury has estimated the end of the subsidy could see as many as 150,000 lose their job.

A separate report showed firms deciding to shut up shop are increasing as they concede they are no longer viable after government support measures wind up.

But while credit reporting agency CreditorWatch says external administrations are rising, on an annual basis they have fallen for more than 13 consecutive months.

“The average number of external administrations over the last six months is 14 per cent lower than for the six-month period to September 2020,” chief executive Patrick Coghlan said.

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