Australian consumer sentiment at one-year low on lockdowns

[SYDNEY] A measure of Australian consumer sentiment slid to a one-year trough in August as coronavirus lockdowns gripped three major cities and delivered a major setback to economic recovery.

The Westpac-Melbourne Institute index of consumer sentiment released on Wednesday fell 4.4 per cent in August, more than wiping out July's 1.5 per cent bounce and the third drop in four months.

That still left the index up 30.9 per cent on August last year when the country was emerging from the first round of nationwide lockdowns. The index reading of 104.1 implied optimists outnumbered pessimists, though the margin was shrinking.

"This is a significant further loss of confidence but better than might have been expected given virus developments," said Westpac chief economist Bill Evans.

He noted the index was at its lowest point in a year but well above the deeply negative depths seen during last year's national lock-down.

"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," said Mr Evans.

Sentiment was much stronger amongst the 76 per cent of respondents that have either been vaccinated or plan to get the jab, with a combined sentiment reading 10.7 points above those not willing to get vaccinated or who have yet to decide.

All the survey's components declined in August, with the measure of family finances compared with a year ago down 1.9 per cent and that for finances over the next 12 months falling 2.7 per cent.

The outlook for the economy over the next 12 months dropped a steep 8.3 per cent, while that for the next five years fell a much more modest 1.2 per cent.

The measure of whether it was a good time to buy a major household item slid 7.2 per cent, as many retail sectors remain shut.

The time to buy a dwelling measure dropped 8.3 per cent to 88.9, suggesting the long boom in prices was putting homes beyond the reach of many.

Yet over 70 per cent of consumers expect prices to rise further over the next year.

AFP