Australian consumer sentiment is at an 11 year high, according to the Westpac-Melbourne Institute Index of Consumer Sentiment.
The index indicated a 6.2 per cent increase to 118.8 in April compared to the prior month, recorded at 111.8, which could mean good news for Australian retailers in the months ahead.
Westpac Chief Economist Bill Evans wrote in the report that the rise was “an extraordinary result.”
“The Index is now at its highest level since August 2010 when Australia’s post-GFC rebound and mining boom were in full swing. Recall that the 16.4 per cent surge in the Index in May last year was the first real sign that the economy was going to recover from the recession more quickly than anticipated. The survey continues to signal that the consumer will be the key driver of above-trend growth in 2021,” Evans noted.
The latest index results show that those first signs of economic recovery in the May 2020 index have continued. The latest results are also an unexpected positive, given that the index coincided with the end of JobKeeper, which many in the wider liquor industry feared would place a strain on consumer spending confidence.
Evans stated: “The survey was conducted in the week following the unwinding of the JobKeeper program. Initial fears that this and associated job losses would undermine confidence have proven to be unfounded. Secondly, there has been disappointing progress on the vaccine roll-out locally. Yet households appear to be resilient.”
Also with the loss of JobKeeper came an obvious fear in consumers about a possible loss of income and therefore a drop in spending confidence. However, Evans again noted how this did not end up impacting consumer sentiment, with employment opportunities actually rising.
“Clearly, confidence would have been buoyed by positive news around the labour market. Job vacancies were reported to be 27 per cent above the pre-COVID level in February last year while the February labour force update showed the unemployment rate had fallen from 6.3 per cent to 5.8 per cent with employment increasing by a stunning 89,000,” Evans noted.
Throughout the past year, liquor retailers have been well supported by consumers, with Liquor Legends for example experiencing a great boost in sales in December 2020. During the peak of the pandemic in 2020, the off-premise industry showed great results, and as Roy Morgan recorded, online packaged alcohol sales especially spiked.
This increase in consumer sentiment could be an extra boost of confidence for Australian retailers into the rest of 2021, after a tumultuous and unpredictable 2020.