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Extended Victorian Lockdown To Test Confidence In Australia

Victoria’s extended 14-day lockdown will be a test for a series of confidence gauges for consumers and business this week.

CANBERRA, Australia — Australians and businesses that keep a keen eye on developments in the economy will have had a lot to mull over in the past week.

The national accounts showed the economy not only grew at a solid 1.8 percent in the first three months of the year, but at an annual growth rate of 1.1 percent, it means the nation has fully recovered from last year’s recession.

House prices also continued to grow at a rapid pace across the country, and nationwide are now over 10 percent higher than a year earlier.

However, such positives were countered by Victoria extending its latest Covid-19 lockdown for another seven days.

Melburnians take to the park for daily exercise in Moonee Ponds, Melbourne. (Luis Ascui/AAP Image)

Previous snap lockdowns across the country this year have taken a toll on confidence, not only in the state where they have has occurred, but around the rest of the country.

A series of confidence readings due this week will gauge the mood of Australians and business – pointers to household spending, investment, and hiring intentions.

Australian Mutual Provident (AMP) Capital chief economist Shane Oliver estimates this latest lockdown will come at an economic cost of around AU$1 billion ($774 billion) to AU$2 billion ($1.5 billion), albeit far smaller than the AU$15 billion ($11 billion) to $20 billion ($15 billion) or more cost of last year’s July to October Victorian lockdown.

“We retain our assessment that the economic impact from the snap lockdown in Victoria will be relatively minor as spending is temporarily hit, but bounces back quickly once the lockdown ends, as has been the case in response to other snap lockdowns across Australia since late last year,” he said.

The ASX200 benchmark index struck a record high of 7300.5 points, before finishing 0.49 per cent up at 7295.4. (Paul Braven/AAP Image)

The weekly The Australia and New Zealand Banking Group (ANZ) — Roy Morgan consumer confidence index is due on June 8.

It tumbled 2.5 percent last week on Victoria’s initial seven-day announcement, with confidence among Melburnians dropping 3.8 percent.

The National Australia Bank’s monthly business survey for May is also due on June 8 after setting record highs for both conditions and confidence in April.

The monthly Westpac-Melbourne Institute consumer sentiment survey is due on June 9.

On the same day, the Australian Bureau of Statistics will release it’s weekly payroll jobs report, a prelude to the following week’s full labor force report for May.

So far the Australian Bureau Statistics believes the end of the JobKeeper wage subsidy in March has had no “discernible impact” on employment.

Treasury boss Steven Kennedy told senators some 56,000 jobs were lost in the four weeks following the end of the program, compared with his initial estimate that losses could be up 150,000.

“We would expect many of those that have lost employment at the end of JobKeeper to regain employment in coming weeks,” he said.

The latest Australia and New Zealand Banking Group (ANZ) job advertisement data series kicks off the week of June 7, which provides a guide to the extent of demand for workers.

Meanwhile, Australian shares look set to extend their record-breaking run, buoyed by gains on Wall Street where the latest payroll figures are expected to see the United States Federal Reserve maintain its support for the economy.

The United States Labour Department said 559,000 jobs were added to the economy in May, an improvement on April’s sluggish gain, but short of economists’ forecasts.

The S&P 500 rose 0.9 percent to 4,229.89, the Dow Jones Industrial Average gained 0.5 percent to 34,756.39 and the Nasdaq climbed 1.5 percent to 13,814.49.

Australian share futures point to a positive opening, rising seven points, or 0.09 percent, to 7300.

The ASX200 benchmark index, on June 4, struck a record high of 7300.5 points, before finishing 0.49 percent up at 7295.4.

(Edited by Vaibhav Vishwanath Pawar and Nikita Nikhil)