Having collapsed 9.5% in August, Westpac-MI Consumer Sentiment improved significantly in September, rising 18%. This leaves sentiment just 1.6% below the average of the six months prior to COVID-19’s initial impact in March.
This has occurred for several reasons. Firstly, the COVID-19 situation in Victoria is looking more promising than previously, with caseloads falling. Secondly, the economic outlook for 2020 has improved. Last week, Westpac revised up its forecast for 2020 from -4.7% to -3.5%, only partly offset by a downward revision to 2021 (from 3.0% to 2.5%). Thirdly households have become more optimistic about the labour market - with unemployment expectations now just 3.3% above the six-month average pre-COVID, as well as fiscal policy and politics more broadly.
