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Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
There seems to be little doubt Australians and businesses are in a better mood as the economy recovers from recession.
Three gauges of confidence this week – and pointers to future household spending, business investment and employment – have all been extremely positive, the latest showing consumer sentiment at a 10-year high.
Scott Morrison says consumer and business confidence is the “critical ingredient” for the Australian economy’s recovery.
“The recovery process has begun but it has a long way to go,” the prime minister told parliament on Wednesday.
“(The latest data) says Australians have responded to the supports that have been put in place … to ensure that they could look forward with great confidence.”
Already that confidence appears to have translated into stronger spending.
Westpac merchant transaction data shows a record 68 million sales were made through the Black Friday and Cyber Monday sales weekend – November 25-30 – to be 5.7 per cent higher than the same period last year.
It also indicated a major shift in the way Australians do their Christmas shopping with 13 million transactions conducted on Black Friday this year compared with eight million during the Boxing Day sales in 2019.
The Westpac-Melbourne Institute consumer sentiment index jumped a further 4.1 per cent in December and is now 48 per cent above the low in April, reaching its highest level since October 2010.
“After only eight months the evidence seems clear that sentiment has fully recovered from the COVID recession,” Westpac chief economist Bill 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 indicators this week showed weekly consumer confidence has now risen 13 times in the past 14 weeks to stand at its highest level in a year, while business confidence rose for the fourth straight month in November 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.