Slowly sneaking back: Australian consumers get confidence boost from rates, tax relief
Confidence is gradually returning to Australian consumers, with interest rates on hold and tax relief potentially brightening the mood.
Shoppers walk past a retail store in Sydney, Thursday, August 24, 2023 (AAP Image/Jane Dempster) NO ARCHIVING
ANZ and Roy Morgan’s weekly confidence survey has been recovering recently after tracking well below long-run averages amid the cost-of-living crisis, with the overall index up another 2.6 points last week.
At 83.9 points, the index is still below the monthly average since 1990 of 110.2.
ANZ economist Madeline Dunk highlighted a particularly big confidence jump when households were queried about financial conditions.
“The rise may be linked to the Reserve Bank of Australia decision to keep rates on hold last week,” Ms Dunk said.
Tax relief that kicked in on July 1 may also be feeding into improved attitudes towards household incomes, she suggested.
Workers have also logged robust pay growth, with the Australian Bureau of Statistics wage price index, due on Tuesday, expected to stay elevated though tapering a little on an annual basis.
Financial market economists expect a further weakening in the year to the end of June, with ANZ pointing to a rise of four per cent, down from 4.1 per cent in March.
But on a quarterly basis, the bank’s economic team is tipping a 0.9 per cent rise, up from 0.8 per cent in the March quarter, to reflect seasonal factors as well as a pick up in newly-approved enterprise bargaining agreements.
The bureau’s wage price index will indicate the pace of underlying price pressures in the labour market at a critical point in the central bank’s price fight.
The RBA kept interest rates on hold at its August board meeting and warned inflation was still high.
Fresh surveying of human resources professionals has painted a mixed picture of the labour market, with employment intentions strong and on the rise – particularly in the public sector.
At the same time, more firms expected to make redundancies, according to the Australian HR Institute’s quarterly outlook report.
Among employers, 27 per cent said they planned to make redundancies, up from 23 per cent in the previous quarter.
AHRI chief executive Sarah McCann-Bartlett said the figures could be driven by restructuring rather than job cuts as organisations pursued digitisation and AI opportunities to eke out productivity gains.
“The redundancy figures could therefore be about restructuring and preparing for the future rather than cost savings,” she said.
