The return of lockdown restrictions is taking its toll on consumer confidence.

According to ANZ’s head of Australian economics, David Plank, consumer confidence dropped by 3.1 per cent last week as fresh lockdowns were announced in parts of Queensland and Victoria.

Breaking the data down by capital city, ANZ found that consumer confidence slipped 7.5 per cent in Brisbane and 1.6 per cent in Melbourne.

Mr Plank noted that “sentiment is still above the level reached during Victoria’s long second lockdown, but it is now in pessimistic territory for the first time since early November last year”.

“Sydney and the rest of NSW, on the other hand, saw an increase in confidence of 3.7 per cent and 2.1 per cent, respectively, as the vaccination rate picked up and some restrictions on construction work were eased,” he added.

Noting that while it’s possible that consumer confidence could continue to dip, Mr Plank pointed to the rising daily new case numbers for NSW as a significant factor. 

“We can’t be sure the low confidence in the current cycle has been reached until COVID case numbers start to trend lower,” he said.

While this recent hit to consumer confidence might not be a huge surprise, given the circumstances, the trend is sure to be watched closely by financial institutions and investors. 

Speaking to nestegg earlier this month, ANZ senior economist Felicity Emmett emphasised the importance of consumer confidence in fuelling the post-lockdown recovery of the Australian economy. 

“The decline in confidence in Sydney is really important, as long as it doesn’t deteriorate by too much, people will head back to the shops,” she said.

According to her, “Credit card data shows, when cities come out of lockdown, spending bounces higher than prior to the lockdown.”

This view on the relationship between the recovery of the economy and consumer confidence is one shared by RBA governor Dr Philip Lowe. 

“The experience to date has been that once virus outbreaks are contained, the economy bounces back quickly,” Dr Lowe said at the RBA’s monthly central bank meeting earlier this month.

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times. 

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times. 

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times. 

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