Australians were hardly punching the air following the easing of COVID-19 restrictions in Victoria with only a tiny rise in consumer confidence posted in the past week.
The weekly ANZ-Roy Morgan consumer confidence index rose just 0.3 per cent, coming off a three per cent national drop in the preceding two weeks as a result of Melbourne 14-day lockdown.
ANZ head of Australian economics David Plank points out that some restrictions remain in Melbourne, such as mandatory wearing of masks in public places and a raft of travel and gathering limitations.
“This probably explains why confidence in Melbourne fell a further 0.9 per cent, while it rose by 4.8 per cent in regional Victoria,” Mr Plank said.
“We see the rapid recovery in confidence in regional Victoria as evidence that consumer sentiment remains resilient in the face of temporary lockdowns.”
Consumer confidence is a pointer to future household spending.
Economists expect consumer spending will be a key plank of Australia’s economic recovery, aided by the wealth effect of rising house prices, a strong labour market, and a surge in household savings.
Australian Bureau of Statistics figures on Tuesday showed the total value of Australia’s 10.6 million residential homes rose by just under $450 billion in the March quarter to $8.3 trillion.
This was the largest rise on record.
The Reserve Bank minutes from its June 1 board meeting showed members continue to closely monitor developments in the housing market.
They note alongside rising prices, credit growth is up – especially from first home buyers – and investors have started to re-emerge in recent months.
“Given the environment of strong demand for housing, rising housing prices and low interest rates, members continued to emphasise the importance of maintaining lending standards and carefully monitoring trends in borrowing,” the minutes say.
A quarterly statement from the Council of Financial Regulators – which comprises the RBA, the Treasury, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission – is due on Thursday.
In March, the council said it would consider possible responses should lending standards deteriorate and financial risks increase.