Consumer and business sentiment seems to be withstanding the impact of the lockdowns in Victoria and the noisy political and media arguments over them.
Tuesday saw the National Australia Bank’s business conditions and confidence survey produce slightly mixed results – both produced negative readings, but while conditions fell 6 points, confidence rose 6 points.
And while Victoria did see a worsening in some measures (wages down according to the ABS, as well as jobs), confidence picked up and the rate of job losses slowed compared to July.
Westpac’s latest consumer confidence survey yesterday showed an improvement (against most forecasts).
The Westpac-Melbourne Institute Index of Consumer Sentiment rose from 79.5 in August to 93.8 in September, despite news of the sharp fall in GDP in the June quarter and confirmation of the first recession in 28 years. In fact, the rise was nearly double the fall in August.
The rebound means the Index is now just 1.6 percent below the average over the six months prior to the emergence of COVID-19 in March. Westpac’s chief economist, Bill Evans says “Clearly this was ‘old news’ with respondents more focussed on the future.”
And after a surprise 12.0% rise in building approvals in July, lending data yesterday from the Australian Bureau of Statistics produced another shock – the sharpest rise in new home loans on record.
The ABS said new loan commitments in July rose 8.9% compared with the previous month and were up more than a 11% on July 2019.
It is the largest month-on-month rise ever recorded by the bureau and has been spurred on by significant rises in owner-occupier loan activity (who have been in turn driven by the record low-interest rates).
Owner-occupier loans rose 10.7% in July, while first-home buyer owner-occupier commitments jumped 14.4%.
New investor loans rose 3.5% compared to the previous month but were still down 5.1% over the year.
ABS head of finance and wealth Amanda Seneviratne said the rise followed an easing of coronavirus restrictions in most states and territories that allowed buying activity to rebound from the lows experienced at the beginning of the pandemic.
“July owner-occupier home-loan commitments rebounded with the largest month-on-month rise in the history of the series as social distancing restrictions eased in most states and territories,” she said.
“New loan commitments for owner-occupied housing rose in all states and territories except the Australian Capital Territory.”
The largest rise in new loan commitments were in NSW, Victoria and Queensland.
But business borrowing for property told a different story.
Construction lending fell 25% to just $2.3 billion and business borrowing for the purchase of property dropped 14.2% to $3.10 billion. Both measures were down sharply over the year.