Consumer confidence has shown signs of reversing the decline that has followed the federal coalition’s first budget.
After all the doom and gloom, there is finally a chink of economic light.
Consumer confidence has risen moderately in the past week, the first time since federal budget leaks started to emerge in April.
Retail spending has posted its longest run of positive monthly results in seven years; a strong economic growth result is expected from Wednesday’s quarterly national accounts; and the Reserve Bank is showing no signs of raising the cash rate any time soon.
But that’s where the good news ends.
Even though the weekly ANZ-Roy Morgan consumer confidence index rose 2.9 per cent, it was still down 12 per cent over a six-week period, which is a worry for retailers in coming months.
The index coincided with a Dun & Bradstreet survey showing 59 per cent of businesses are concerned about the impact of the budget on their operations.
At the same time, the latest Newspoll showed barely any improvement in support for the coalition after two weeks of trying to sell its first budget and that Labor would be swept to power if an election was held tomorrow.
But Treasurer Joe Hockey remains adamant the budget will make the economy stronger and more resilient.
“It is going to lead to the creation of more jobs,” he told reporters in Canberra on Tuesday.
Consumer spending rose 0.2 per cent to $23.2 billion in April, the month before the budget.
Australian National Retailers Association chief executive Margy Osmond said the 12th consecutive rise in spending would have given retailers a nice surprise.
“[But] we would expect May and June to be the deal-breakers in retail sales momentum,” she said in a statement.
The RBA left the cash rate at its all-time low of 2.5 per cent at its monthly board meeting.
“On present indications, the most prudent course is likely to be a period of stability in interest rates,” governor Glenn Stevens said in his post-meeting statement.
Economic growth has been firmer since the start of the year, partly as a result of very strong increases in resource exports, he said.
Balance of payments data for the the March quarter has shown net exports – exports minus imports – will contribute a much stronger than expected 1.4 percentage points to growth in the quarter.
Some economists upgraded their March quarter gross domestic product forecasts ahead of Wednesday’s national accounts, which could see annual growth above 3 per cent for the first time in about two years.