Consumer concerns related to the NSW Government’s latest lockdown for Greater Sydney have yet to spill out into other states, in contrast to similar conditions seen under similar lockdown conditions in Victoria through August of 2020.
The Westpac-Melbourne Institute Index of Consumer Sentiment rose by 1.5 percent to 108.8 in July, up from 107.2 in June, even as the state of New South Wales was thrust into preliminary lockdown in early July.
The survey conducted over a 4-day period during the first week of July shows that consumer confidence has continued to grow nationwide, despite a sharp fall in NSW, as other states like Victoria and Western Australia recover from covid-19 related disruptions in June.
The main takeaway from the survey results is that concerns around the current virus outbreak and associated restrictions in NSW are not spilling over to the rest of the country. This contrasts with Victoria’s ‘second wave’ outbreak in August last year which weighed heavily on sentiment across the rest of the country.
The increase in consumer confidence for June follows a 9.8 percent drop over the last two months, from April to June, that hinged on concerns and weakness in Victoria, which dropped by a total of 16 percent, and Western Australia, down by 18 per cent, after a period of lockdowns.
Meanwhile, consumer confidence in NSW remained steady over the same period, before the pattern was reversed in July following a surge in covid-19 cases and the introduction of lockdown measures, according to the survey.
The report notes that Sydney’s lockdown restrictions hit consumer confidence hard, as the state index dropped by 10.2 percent, while Sydney saw a 13.6 percent fall.
Plunging rates of consumer confidence in NSW were offset by strong recoveries in other states, however, as Victoria recorded a jump of 15 percent, and Western Australia a rise of 11.5 percent, as each state came out of lockdown.
Despite the fall in NSW, confidence remains at reasonably firm levels, with indexes for Sydney, at 108.0, and NSW, at 105.3, both still above their long-term averages. Though the state’s levels could be further impacted still, as the state endures a lockdown extension of two weeks.
It appears likely that, at the time of the survey, many respondents may have been anticipating a shorter lockdown period than is now being mooted. Ominously, that suggests confidence in Sydney and NSW could fall significantly further if lockdown measures are unsuccessful or slow to act in containing the outbreak.
While “divergent state sentiment moves” were a central theme of the nation’s consumer confidence levels, the survey’s results highlighted other new, underlying trends.
Confidence showed a particularly strong 17 percent rebound among tradespeople, suggesting the sustained lift in housing construction and renovations is providing significant ongoing support to key parts of the wider economy.
Those occupied in sales and clerical roles and in manufacturing also posted strong double-digit gains in sentiment.
On the other hand, sentiment showed a notable 6 percent weakening among those employed in the education sector presumably reflecting virus concerns, the return to remote schooling in Sydney, and what now looks to be more distant prospects for an eventual return to foreign student inflows.
NSW State Government Announces More Support To Help Businesses During Lockdown
The NSW Government has announced a major economic support package worth billions of dollars serving a purpose to help businesses and individuals right across the state who have been impacted by the latest covid-19 lockdown.
Treasurer Dominic Perrottet said the NSW Government was offering support in as many areas as possible, with payroll tax cuts for eligible businesses, up to $75 million in support for the performing arts sector and $26 million for the accommodation industry.
The support package will now be up to a total of $5.1 billion, this includes more than $1 billion from the Commonwealth as part of a business and employee support program.
The business grants program announced at the end of June has also been expanded, with grants between $7500 and $15,000 available to eligible businesses with annual wages up to $10 million.
A new grant program has also been introduced for smaller micro businesses with turnover between $30,000 and $75,000.
Thousands of employees will also be protected with NSW committing half of a new $2.1 billion business and employee support program to be delivered together with the Commonwealth.
Businesses in NSW will benefit from payroll tax waivers of 25 percent for businesses with Australian wages of between $1.2 million and $10 million that have experienced a 30 percent decline in turnover.
From Sunday 18th July, the Covid-19 Disaster Payment will also increase from $500 to $600 each week if a person has lost 20 hours or more of work a week, or $325 to $375 each week if a person has lost anywhere between 8 and 20 hours of work.
The increased payment will be available to NSW individuals outside Commonwealth-declared hotspots in Sydney if they have lost hours and satisfy the eligibility criteria.
The payment will be a recurring payment for approved recipients for as long as the Commonwealth-declared hotspot and lockdown restrictions remain in place. This will remove the need for recipients to re-claim for each seven-day period of a lockdown.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 07 36086800.
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