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Consumers set to spend following budget sentiment boost
The announcement of last week’s budget and containment of the COVID-19 threat in Sydney is seeing surging consumer confidence, which is tipped to lead to an increase in spending, according to two banks.
Consumers set to spend following budget sentiment boost
The announcement of last week’s budget and containment of the COVID-19 threat in Sydney is seeing surging consumer confidence, which is tipped to lead to an increase in spending, according to two banks.
The latest ANZ-Roy Morgan consumer confidence index and Commonwealth Bank household spending intention showed that consumer confidence has risen over the last week.
ANZ-Roy Morgan found that consumer confidence increased by 0.8 per cent, lifting to 112.5 points with more Australians now saying they are ‘better off financially’ and it is ‘a good time to buy major household items’.
ANZ’s head of Australian economics, David Plank, noted that residents in Sydney had the largest increase in sentiment with fears of lockdowns not eventuating, while the budget is continuing to lift confidence.
“The greater than expected spending promised by the government in the federal budget may have also provided a boost to confidence,” he said.
“Among the details, 45 per cent of the responders said it is a ‘good time to buy a major household item’ versus 22 per cent for it being a ‘bad time to buy’, which are respectively the highest and lowest values since February 2020.”
Separate research released by Commonwealth Bank also showed spending intentions across all seven categories tracked in its index are improving.
“This comes as no surprise as we know that April 2020 was the low point for spending as the first wave of COVID-19 restrictions hit Australians,” said CBA chief economist Stephen Halmarick.
“A year later, the economy has recovered strongly from COVID-19 impacts, with employment above pre-pandemic levels and household spending intentions on the rise as consumers once again feel confident about their economic prospects.”
The government looking to continue its support through 2021-2022 despite an improving economic outlook is leading to consumers looking to spend their money.
“The budget’s targeted support programs aim to put more people into jobs and ensure the economic recovery is widespread,” Mr Halmarick said.
Home buying intentions continued their march higher in April 2021, posting gains on both April 2020 and April 2019. Both home loan applications and Google searches increased in April as the national real estate market attracted prospective buyers.
“We expect the residential property market to be a key source of support for Australia’s economy in 2021, driven largely by the very low level of interest rates,” Mr Halmarick said.
Retail spending intentions posted strong gains in April, sharply recovering from declines recorded in March. Retail spending was stronger this April than both April 2020 and April 2019.
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