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Australians remain optimistic despite COVID-19 lockdowns, and vaccines are a key reason why.
Key points:
- Vaccinated people are more confident than those who are unwilling to get vaccinated
- Consumer sentiment has fallen noticeably this month, but remains positive overall
- Western Australia and South Australia are far more confident
The latest Westpac-Melbourne Institute consumer confidence survey shows sentiment has fallen to its lowest point in 11 months.
The extended lockdowns in Sydney and New South Wales, and rolling lockdowns in other states, have hit confidence hard across the country this month.
However, economists say the result is better than expected, given sentiment remains in positive territory overall.
They say the availability of effective COVID-19 vaccines is a key reason for confidence at the moment.
Vaccinated Australians much more confident
You read the Westpac-Melbourne Institute index this way.
A reading above 100 means the majority of people are feeling optimistic, while a reading below 100 means the majority are feeling pessimistic.
The index fell from 108.8 in July to 104.1 in August — a decline of 4.4 per cent.
It means confidence has plunged 12.4 per cent since its 11-year high in April.
However, it is still sitting well above the deeply negative lows seen during last year’s national lockdown (75.6) and Victoria's second-wave restrictions (79.5).
Economists say the vaccine is playing a crucial role.
"The virus situation locally is clearly troubling, but consumers appear reasonably confident that it will come back under control, and that once it does, the economy will see a return to robust growth," Westpac senior economist Matthew Hassan said.
Crucially, Mr Hassan said sentiment was "much stronger" among people who were vaccinated or planned to be.
He said this group accounted for 76 per cent of all respondents to the survey, and their combined level of confidence was more than 10 per cent higher than people who were not willing to get vaccinated or who had not decided yet.
"The gap is literally the difference between optimism and pessimism — in index terms, 106.6 points versus 95.9 points — and is apparent across all age groups," Mr Hassan said.
Tradesmen feeling much less confident
The survey found a huge fall in confidence in some sub-groups this month.
The biggest decline in confidence has been felt by "para-professionals and tradies" (-15.2 per cent) for whom disruptions to building sites, pressures on health and education systems, and the restrictions in place for parts of Sydney have all been a factor.
"The eight local government areas of concern in Sydney’s south and west facing the tightest lockdown restrictions account for over 40 per cent of the city’s tradies," Mr Hassan said.
Sentiment also posted a bigger fall among those working in "sales or clerical" roles (-13.3 per cent), and those aged 18 to 24 years (-10.5 per cent).
The survey was based on 1,200 adults aged 18 years and over across Australia.
It was conducted in the week from August 2 to August 7, 2021. The data have been weighted to reflect Australia’s population distribution.
States have very different reactions
As the Delta variant spread from NSW to other states, consumer sentiment deteriorated at different rates around the country.
Sentiment in Victoria recorded the biggest fall this month, knocking the state's index down 10.8 per cent, reversing most of July’s 15 per cent gain.
The prolonged delta lockdown in NSW knocked a further 4.1 per cent off confidence there, with the state index down 14.8 per cent from its May high but still in slightly positive territory overall, at 101.
Sentiment in Queensland fell 4 per cent to 103.
"That said, the hit looks to have been cushioned by official news that Brisbane will host the 2032 Olympics — the state's 'economy, next five years' sub-index posted a solid 7.1 per cent gain, running strongly against the grain of a 3.2 per cent decline across the rest of Australia," Mr Hassan said.
But sentiment has gone up in other parts of the country.
Western Australia saw consumer sentiment rise by 4.1 per cent, while South Australia's increased by a large 9.1 per cent.
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