Australians who have had their coronavirus jab, or intend to do so, appear to be more upbeat about the outlook than those not willing to take part in the country's vaccination program.
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Faced with half the population in lockdown, new daily virus cases in NSW remaining in the hundreds and now Melbourne extending its shutdown by another week, it is little surprising that consumer confidence is on the slide.
The Westpac-Melbourne Institute consumer sentiment index fell 4.4 per cent in August to 104.1 points.
However, at above 100, the index still indicates there are more optimists than pessimists, and it remains comfortably above last year's low when there was a national COVID-19 lockdown.
"This is a significant further loss of confidence but better than might have been expected given virus developments," Westpac senior economist Matthew Hassan said.
"The availability of effective COVID vaccines is a key source of support for confidence."
The survey found 76 per cent of respondents had either been vaccinated or intended to do so and were more confident by 10.7 points than those unwilling to get vaccinated or yet to make up their mind.
"The virus situation locally is clearly troubling, but consumers appear reasonably confident that it will come back under control, and that once it does, the economy will see a return to robust growth," Mr Hassan said.
There is a wide expectation among economists that the economy will sink into contraction in the September quarter.
AMP Capital chief economist Shane Oliver estimates the recent spate of lockdowns have cost the national economy $17 billion so far, and as such expects a 2.5 per cent downturn in the September quarter.
"However, growth is likely to start recovering through the December quarter as lockdowns ultimately suppress cases, but more sustainably as rapidly rising vaccination rates allow a transition away from using lockdowns," Dr Oliver said.
National Australia Bank economists also expect the unemployment rate will rise to at least 5.5 per cent in the near term, compared with 4.9 per cent in June, before resuming its recovery and ending next year at 4.5 per cent.
Despite the immediate doom and gloom hitting businesses, there hasn't been a deluge of firms having to close their doors for good.
New figures show the number of business defaults, court actions and voluntary administrations fell in July.
However, commercial credit bureau CreditorWatch warns that given the impact current restrictions are likely to have, and the reduced stimulus and insolvency protections compared to 2020, it is expected these figures will deteriorate in the short term.
It is particularly concerned about the hospitality and accommodation sector and retailers.
"We are confronting increasingly challenging times from a strong starting point," CreditorWatch CEO Patrick Coghlan said.
Business defaults fell by 20 per cent in July compared to a month earlier, court cases declined by 38 per cent and firms going into administration were down six per cent.
Australian Associated Press
