Australia consumers see glimmer of hope, start to spend more

SYDNEY (Reuters) – The mood among Australian consumers brightened just a little in the latest week as success in containing the coronavirus led to talk of easing the economic lockdown, helping lift spending from very depressed levels.

A survey of 1,000 consumers from Australia and New Zealand Bank out on Tuesday showed its measure of confidence rose 5.3% last week to 89.5, the fifth straight week of gains.

That was up from a record low of 65.3 hit in late March when fears over the virus were at their height, but still far below the long-run average of 112.9.

“Overall sentiment is now around the levels seen during the GFC, while a number of the sub-indices have returned to levels that, while still low, are within the previous historical experience,” said ANZ Head of Australian Economics David Plank.

“There is a long way to go before sentiment gets to levels where people can be said to be optimistic, however.”

Respondents were more upbeat on their current finances, with that index rising 5.3%, while the outlook for future finances firmed 5.9%.

The measure of current economic conditions improved a slight 2.2%, but the outlook picked up by 13.7% as authorities relaxed some social distancing rules.

Figures from Commonwealth Bank of Australia on credit and debit card spending also showed some signs of life.

Total spending over the two weeks to May 1 was still down by 10% on year ago levels, but that was half the fall seen during the two weeks to mid-April.

The improvement came across a range of goods and services, while online sales lifted sharply, with retail items rising by 110% compared to the same period a year earlier.

“Our analysis offers a glimmer of hope that we may be past the lowest point in terms of people spending less,” said CBA’s head of Australian economics Gareth Aird. “Although people are continuing to spend less, the rate of decline is slowing.”

Treasurer Josh Frydenberg has warned that output across the entire economy could contract by 10% in the three months ending June, easily the sharpest decline on record.

Frydenberg will reportedly use a speech later on Tuesday to argue for re-opening the economy as restrictions cost an estimated A$10 billion ($6.43 billion) a week.

(Reporting by Wayne Cole; Editing by Sam Holmes)