Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Consumer confidence has risen for a fourth straight week in anticipation of a big-spending federal budget.
Prime Minister Scott Morrison says next week’s budget will be aimed at growing the economy, with some economists predicting the deficit could blow out to a massive $200 billion for 2020/21.
“When you grow your economy you can build the revenues again, and that is how Australia comes back from the budget we will have to announce next week,” he told reporters in Canberra on Tuesday.
The weekly ANZ-Roy Morgan consumer confidence index, a pointer to future household spending, has reached its highest level in more than three months.
The biggest driver is feelings around current economic conditions.
“This likely reflects expectations for significant additional spending to be announced in next week’s federal budget,” ANZ senior economist Catherine Birch said on Tuesday.
But feelings around current financial conditions have plateaued for several weeks.
“This indicator will be one to watch as JobSeeker and JobKeeper payments are reduced,” Ms Birch said.
Treasurer Josh Frydenberg last week outlined an updated fiscal strategy focused on jobs and economic recovery, rather than repairing the budget, until unemployment is comfortably back under six per cent.
The jobless rate sits at 6.8 per cent after a surprise fall in August, but is expected to rise again in coming months.
With an index of 95 points, consumer confidence remains lower than its monthly average dating to 1990.
A figure below 100 points indicates there are more pessimists than optimists.
Speculation the Reserve Bank could ease monetary policy again at its board meeting next Tuesday has lost some traction.
Economists at National Australia Bank and Westpac now anticipate a move at the November meeting.
This would include a cut in the cash rate to 0.10 per cent from an already record low of 0.25 per cent, along with other measures to help lower funding costs across the economy.
The bank could also buy more bonds to pump liquid into the economy while keeping market interest rates low.
Westpac chief economist Bill Evans said any changes would now be introduced on November 3, giving the government adequate time to sell its budget without any distractions from monetary policy.