The spike in the jobless rate to a 12-year high has hit consumer confidence, reeling almost six per cent in the past week.
Australians may whinge about tough budgets, but they don’t like rising unemployment either.
Just when consumer confidence looked to be stabilising after its dramatic shake-up around the time of the May federal budget, sentiment took another turn for the worse after last week’s increase in the jobless rate.
The jobs figures, which had unemployment rising to a 12-year high of 6.4 per cent, sent the ANZ-Roy Morgan consumer confidence rating tumbling 5.7 per cent in the past week.
ANZ economists also blamed a falling Australian share market and geopolitical tensions surrounding Iraq and the Ukraine for a drop that leaves confidence below its long-run average.
In contrast, business confidence remains unfazed by the Abbott government’s first budget.
The National Australia Bank’s monthly survey found business confidence returning to last September’s post-election high.
Sentiment was bolstered by an increase in business conditions to a four-year high.
However, NAB chief economist Alan Oster says the recovery continues to be “relatively jobless”.
NAB now expects unemployment to peak at 6.5 per cent by the end of 2014, up from its earlier prediction of 6.25 per cent.
Other figures released on Tuesday suggested the rise in house prices is returning to a more sustainable level, a key ingredient to achieving healthy levels of new home building.
The Australian Bureau of Statistics residential property price index rose 1.8 per cent during the June quarter for an annual rate 10.1 per cent.
Within that, Sydney prices jumped at an annual rate of 15.6 per cent.
At the other end of the scale, Canberra, which is expected to be the hardest hit by public servant job cuts, grew by just 2.2 per cent over the year.
Like all federal departments and agencies facing funding cuts, the ABS is being forced to reduce its workload, which may mean discontinuing this house price index after a review.
“At a time when governments and businesses need more not less official information about economic conditions, the reduction in ABS data represents a cost to the economy, not a saving,” Housing Industry Association economist Diwa Hopkins warned.