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Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Consumer confidence has struck a 10-year high, buoyed by signs of economic recovery from the COVID-19 pandemic.
The Westpac-Melbourne Institute consumer sentiment index jumped a further 4.1 per cent in December to 122.
Westpac chief economist Bill Evans said the index is now 48 per cent above the low in April and the depths of the coronavirus crisis.
“After only eight months the evidence seems clear that sentiment has fully recovered from the COVID recession,” Mr Evans said.
He noted the recovery has been far more rapid than the downturn during the global financial crisis when sentiment took a full year to clearly signal the crisis had passed.
In the last recession of the early 1990s it took nearly three years for sentiment to sustain an upswing.
“That evidence … provides some hope that the longer-lasting ‘scarring’ effects we usually get from recessions will be well contained,” Mr Evans said.
Other consumer and business confidence measures released this week have also been buoyant, providing positive pointers for future household spending, investment and employment.
The ANZ-Roy Morgan consumer confidence index has now risen 13 times in the past 14 weeks to stand at its highest level in a year.
The monthly National Australia Bank’s business survey also showed confidence rising for a fourth straight month in November and to its highest level in two-and-a-half years.
The economy expanded at its strongest rate in more than 40 years during the September quarter and the confidence readings and other data since suggests the strong rebound should continue into 2021.
Such strength has prompted commercial credit bureau CreditorWatch to urge the federal government to place stricter controls on stimulus programs.
It has found debtors are taking an average of 33 days to pay bills, compared with a peak of 47 days in June and during the depths of recession.
“The recovery in payments data is a clear indication the economy is on the way back, supported by better-than-expected GDP numbers for the September quarter,” CreditorWatch chief executive Patrick Coghlan said.
“There’s potential for the federal government to consider introducing further means tests for economic stimulus programs such as JobKeeper, to reduce pressure on the public purse and allow economic conditions to normalise.”
The JobKeeper wage subsidy is not due to end until March next year.
Mr Coghlan also believes the temporary moratorium on trading while insolvent should cease at the end of this month.
“Extending this provision risks causing damage to the economy as solvent firms could be extending credit to insolvent firms, potentially creating a domino effect down the track if insolvent firms are allowed to continue to operate,” he said.
More than 3000 Australian companies have avoided going into external administration since April, compared to figures from 2019.