Consumer confidence has suffered a setback, with data pointing to lingering concerns over the federal budget.
It seems it will take a lot more than a fall in the jobless rate to lift the spirits of Australians.
Consumer confidence has surprisingly dropped, and lingering concerns over the federal budget is seen as the main culprit for such gloom, rather than a deteriorating jobs market.
Economists expect the unemployment rate in Thursday’s official labour force figures for August to show a modest decline to 6.3 per cent.
This will follow the unexpected jump to a 12-year high of 6.4 per cent in July.
However, government data released on Wednesday suggests any further declines will come slowly.
The leading indicator of employment rose in September after falling for 10 consecutive months.
But it suggests employment will grow more slowly than its long-term trend of 1.3 per cent in coming months.
That’s because the index anticipates movements in the growth cycle of employment but with a turning point confirmed only after six consecutive monthly moves in the same direction.
Other data on Wednesday showed a major setback to consumer confidence despite signs of stability in recent months following the steep tumble after the May budget.
The monthly Westpac-Melbourne Institute confidence index dropped 4.6 per cent in September.
Westpac chief economist Bill Evans described it as a “surprising and disappointing” result.
“Most of the steady recovery we have seen in the index over the last three months has been eroded,” Mr Evans said.
The survey was carried out between September 1 and 7, in a week when the government struck a deal in the Senate to scrap the mining tax. That also meant future increases in the compulsory superannuation guarantee would be delayed by seven years.
The latest survey also quizzed respondents on economic news they recalled during the past three months.
Topping the list at nearly 63 per cent was “budget and taxation”.
This was the second-highest reading since the survey was introduced in the mid-1970s, the highest being in June and directly after the budget.
While news on the budget was still regarded unfavourably, Mr Evans said the survey suggested households were a little more comfortable with it.
“But it continues to dominate their thinking and they remain on edge,” he said.