Australia: Successful containment strategy props up consumer sentiment in May
May 14, 2020
The Westpac-Melbourne Institute consumer sentiment index jumped to 88.1 in May from 75.6 in April, consequently recovering from the index’s worst reading since February 1991—logged amid the deep recessions of the early 1990s. The unexpectedly strong bounce back was likely fueled by the government’s success in containing the spread of the coronavirus. However, sentiment remained below the 100-mark, indicating that there were more pessimists than optimists among Australian consumers.
May’s improvement was broad-based, although the largest increases were recorded for the near-term outlook for the economy and spending decisions. Consumers’ outlook over the general economic situation in the year ahead jumped, but remained entrenched in pessimistic terrain. Meanwhile, households’ expectations over the general economic situation in the next five years also gained ground, although the gain was marginal. Moreover, households’ willingness to make major purchases grew markedly, following the sharpest fall on record in April. Furthermore, consumers’ confidence regarding their future financial situation strengthened somewhat in May, while employment expectations improved drastically. Nevertheless, consumers’ assessments of “time to buy” a dwelling and house prices expectations fell considerably.
FocusEconomics panelists are still assessing the latest developments.