In just a week consumer sentiment to the Australian economy has increased by half, suggesting that things might not be as bleak as thought.
With fires devastating much of the country, it was hard to feel positive about the New Year. Due to fire danger, many councils made the decision to cancel their firework displays; and those who didn’t were met with controversy on their appropriateness.
Likewise, many fire ravished regions, such as the NSW South Coast town of Malua Bay spent New Year’s Eve day stranded on the beach, covered in ash – far from the joyous occasion it usually is.
So, when last week’s ANZ-Roy Morgan Consumer Confidence report revealed a 4-year low in spending, it was of little surprise but albeit, unusual for this time of year.
Last week, consumer sentiment towards the future economic outlook was recorded at its lowest level since 1994, falling by 8.1%.
Similarly, sentiment on current economic conditions fell by 12.9%.
ANZ’s Head of Australian Economics, David Plank, said that the results were understated when compared to what is usually seen at this time of year.
“Against the backdrop of the weekend’s catastrophic bushfires it is not surprising consumer confidence declined,” he said.
“But the reported decline of 1.7% since the last survey in mid-December understates the weakness when one considers the New Year usually sees a strong gain in sentiment.”
“Between 2010 and 2019, the average gain in confidence for the first week of January has been 3.4%. Against the usual seasonal gain of recent years, confidence has started 2020 in very poor shape and at its lowest level in more than four years.”
However, according to Monday’s report, things may be starting to bounce back.
With confidence increasing by 1%, results recovered by more than half of what was seen in the previous survey.
Related: Big Four Banks Rush to Bushfire Aid
After their 12.9% fall, current economic conditions also saw a gain (6.1%) and future economic conditions more than reversed last week’s loss by gaining 8.6%.
Despite the gains, confidence in ‘current personal finances’ dropped by 5.5%.
Mr. Plank believes the improved results can be attributed to milder weather conditions and positive economic news.
“The weekend’s consumer confidence survey is of considerable interest given the plunge in sentiment in economic conditions recorded over the first weekend of January,” he said.
“With milder weather seeing the intensity of fires diminish, though not by enough to prevent further tragic loss of life, and some better economic news in the form of building approvals, job vacancies and retail sales, it is not surprising much of the weakness in economic conditions reversed.”
“…This offers some hope for some recovery in consumer spending after what appears to be a very subdued Christmas retail season.”
Words by Kathryn Lee
If you are able to donate to bushfire recovery efforts, these are just some of the organisations seeking donations:
Affected communities – The Australian Red Cross’ Disaster Relief and Recovery Fund is working to provide short and long-term support to people and communities affected by the bushfires.
Wildlife – The NSW Wildlife, Information, Rescue and Education Service (WIRES) is helping local wildlife affected by the NSW bushfires. In Victoria, Wildlife Victoria are seeking donations. Australia wide, the World Wildlife Foundation (WWF) are also seeking donations.
The Firefighters – Donations to volunteer firefighting services can be made through their respective websites: The NSW Rural Fire Service (RFS), The Victorian Country Fire Association (CFA), and South Australia’s CFS
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