Confidence steadies ahead of COVID vaccine

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Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)

 

Australians appear to need an injection of good news to lift their mood, which may come from a successful rollout of the coronavirus vaccine.

Consumer confidence is consolidating after recovering from last year’s major setback when the economy sank into recession and gyrations at the turn of the year in response to snap COVID-19 lockdowns in parts of the nation.

The ANZ-Roy Morgan consumer confidence index – a pointer to future household spending – eased 0.6 per cent in the past week after a 0.8 per cent rise previously.

ANZ head of Australian economics David Plank said confidence is now holding close to its long-run average and probably needs some meaningful news or developments to break away from here.

“The vaccine rollout in Australia could be the next big trigger, with a successful program possibly propelling sentiment much higher,” Mr Plank said releasing the survey on Tuesday.

“Of course, difficulties in providing vaccine coverage could have the opposite effect.”

Economists expect the National Australia Bank’s monthly business survey due later on Tuesday will show a recovery in confidence in January, a positive for hiring intentions and investment.

A separate survey by the Chamber of Commerce and Industry Queensland on Monday showed confidence among businesses in the state has risen sharply as virus restrictions eased.

In December, the NAB survey showed while confidence weakened in response to the snap lockdown in NSW’s northern beachers just to prior Christmas. This was followed a few weeks later by the closing down of the Greater Brisbane region and then Perth.

However, business conditions rose for a fourth consecutive month to stand at their highest level since late 2018.

Notably, employment conditions showed a sharp increase.

Since then Reserve Bank governor Philip Lowe has provided positive views on the economic outlook, but made it clear that interest rates will not be rising any time soon, possibly not until 2024, if not later.

He said Australia has done better than most other countries on both the health and economic fronts, while vaccines hold out the prospect of restrictions being eased and many activities returning close to their pre-pandemic normality.

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