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BILL’S BITES: Lockdown saps Sydney’s sentiment

07:31pm July 14 2021

Westpac chief economist Bill Evans discusses the impact of Sydney’s lockdown on consumer sentiment. 

The monthly Westpac-Melbourne Institute Index of Consumer Sentiment rose by 1.5 per cent to 108.8 in July. 

So, why hasn’t Sydney’s lockdown had a bigger impact on sentiment across the rest of the country, like we saw from Victoria’s ‘second wave’ outbreak in August last year? 

The survey was conducted over the week of July 5–9, during the lockdown in Sydney and restrictions in regional NSW but before the tightening of restrictions announced on July 9, and, of course, today’s announcement that the lockdown will be extended. .

Also, confidence has held up overall as other states – notably Victoria and Western Australia – recorded strong bounce-backs from COVID-related disruptions in June. 

In contrast, the sharp rise in COVID cases and associated move to lockdown in Sydney hit NSW consumer confidence hard, the state index dropping 10.2 per cent, including a 13.6 per cent fall in Sydney. This was fully offset by strong recoveries in Victoria (up 10.5 per cent) and WA (up 15 per cent) as both states came out of lockdown. 

For context, the fall in Sydney compares with a 7.3 per cent fall during the Northern Beaches lockdown at the start of the year and the 18.7 per cent fall in Melbourne heading into the ‘second wave’ lockdown in June-August last year. 

The good news is that, despite the fall, confidence is still at relatively firm levels with indexes for Sydney (108.0) and NSW (105.3) both still above their long-term averages. 

However, given it seems likely that at the time of the survey many respondents may have been expecting a shorter lockdown, it suggests confidence in Sydney and NSW could fall significantly further if lockdown measures are unsuccessful or slow to act in containing the outbreak.

Read more at Westpac IQ

The information in this article is general information only, it does not constitute any recommendation or advice; it has been prepared without taking into account your personal objectives, financial situation or needs and you should consider its appropriateness with regard to these factors before acting on it. Any taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and our interpretation. Your individual situation may differ and you should seek independent professional tax advice. You should also consider obtaining personalised advice from a professional financial adviser before making any financial decisions in relation to the matters discussed.

William (Bill) Evans is Westpac’s economic spokesman and is responsible for all of our economic research. In 1991, Bill joined Westpac as the Chief Economist and Head of Research. A graduate of Sydney University (BEc. Hons I and University Medal) and the London School of Economics (M. Sc.), Bill has worked as Research Manager for the Reserve Bank of Australia and as a Treasurer at the Commonwealth Bank of Australia. Bill travels frequently, advising Westpac’s customers on the Australian economy and financial markets.

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