While consumer confidence continues to increase across Australia, business confidence has reported the opposite, dropping 2.3pts.
What may come as a surprise, business confidence isn’t as strong as the consumer’s side, dropping two percent to 113.0 as border restrictions relax and vaccine rates continue to increase. In some positive news, however, business confidence is 3.6 percent higher than the same period in 2020 (109.1).
In contrast, consumer confidence has increased 1.5pts to 107.5, which remains below the 2021 weekly average of 108.1, and is also 1.5pts below the same week in 2020 (109.0). This slight uplift in confidence is likely due to an increase in future financial conditions.
“Business Confidence dropped by 2.3pts (-two percent) to 113.0 in November despite the end of lockdowns in NSW, Victoria and the ACT in early to mid-October.,” said Michele Levine, the CEO of Roy Morgan. “However, domestic borders around most of Australia remained closed during the month with it now easier to travel to London or New York for Sydneysiders and Melburnians than to travel across the country to Perth or Brisbane.”
For consumers, confidence increased in NSW, Queensland and WA, but saw minor reductions in states such as Victoria, SA and Tasmania. Buying intentions remain somewhat unchanged in the last week, with 41 percent of Australians saying that now is a good time to buy a major household item, down 1ppt. Contrastingly, 27 percent of consumers say that now is a bad time to buy, which has increased 1ppt.
“Consumer confidence rose 1.4 percent last week even as ‘weekly inflation expectations’ rose a touch to 4.9 percent, said David Plank, the ANZ Head of Australian Economics. “Consumers are positive about the outlook despite the news about the Omicron variant. Among the major cities, confidence increased by 5.0 percent in Sydney, 1.0 percent in Brisbane and 1.4 percent in Perth, while it dropped in Melbourne (-1.2 percent) and Adelaide (-0.5 percent). The sustained jump in inflation expectations doesn’t seem to have had a major impact on sentiment, unlike what is occurring elsewhere such as in the US.”
Looking forward, Michele Levine suggested that the State Governments remain strong on the roadmaps they’ve set in place if they wish to see confidence remain for business.
“For businesses looking to solidify their spending and investment plans, it’s vital that State Governments stick to the roadmaps for easing restrictions and re-opening borders that they’ve outlined,” said Levine regarding business confidence. “If there’s anything businesses hate most it is uncertainty about the future and with a highly vaccinated population, there should be no reason for new domestic border closures once restrictions ease.”
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