Confidence dragged down by Vic lockdown

Confidence among Melburnians continues to be undermined by Victoria’s COVID-19 lockdown, but Sydneysiders have already got over it.

The weekly ANZ-Roy Morgan consumer confidence index – a pointer to future household spending – fell by a further 0.6 per cent nationally after the 2.5 per cent tumble the previous week.

Confidence in Melbourne dropped another 2.4 per cent after the lockdown was extended for another seven days, but in Sydney the mood recovered by 4.3 per cent, having also dropped heavily the previous week.

ANZ head of Australian economics David Plank said the emergence of a more infectious strain of COVID is raising concerns that the lockdown could be extended again. 

“This could have a more lasting impact on confidence than we have seen with recent snap lockdowns,” he said.

However, while components of the index showed respondents were unhappy about their current financial position and economic views, they were more upbeat about the outlook.

The sub-index for future financial conditions rose two per cent and for future economic conditions it rose by 1.5 per cent.

“The fact that consumers became more confident about future financial and economic conditions suggests even a longer shutdown may not have a permanently dampening effect on overall sentiment,” Mr Plank said.

Victoria’s lockdown is due to end on Thursday.

Still, Victoria’s situation has overshadowed otherwise positive economic results in recent weeks.

Recent reports show the economy has already fully recovered from last year’s recession, the unemployment rate has fallen rapidly to 5.5 per cent and is set to head even lower, and house prices continue to surge ahead.

The monthly National Australia Bank’s monthly business survey for May is also due on Tuesday.

Record highs were set for both business conditions and confidence in April, a positive result for both investment and hiring intentions.

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