Colin Brinsden, AAP Economics Correspondent
(Australian Associated Press)
If Australians aren’t gloomy enough, one of the major banks is warning continued strong business conditions and encouraging signs in the jobs market is helping to mount the case for an official interest rate rise.
National Australia Bank’s monthly survey found business conditions struck their highest level in nearly a decade, consistent with the recent run of mostly upbeat economic data.
“Improvements in labour market indicators point to further falls in the unemployment rate, helping to mount a case to bring forward RBA rate rises,” NAB chief economist Alan Oster said on Tuesday.
A separate survey by Westpac and the Melbourne Institute found small and medium business owners expect to increase their staffing levels within the next 12 months.
However, Mr Oster said there were few signs of inflation or wage pressures as yet, and downbeat consumer confidence was still a point of concern.
The NAB report for August also showed a drop in business confidence, possibly over escalating tensions over North Korea.
Rising employment and wealth gains from housing are resulting in higher spending, but it would appear consumers are enduring this shopping spree through gritted teeth.
Deloitte Access Economics says retail turnover over the June quarter grew 1.5 per cent, the highest result since the March quarter 2013. It follows a subdued start to 2017.
“But consumers aren’t happy,” the firm’s partner David Rumbens says in his quarterly Retail Forecasts report.
“Despite improvements in unemployment expectations and an increase in business confidence, consumer sentiment is at a low point with concerns over financial risks.”
This was borne out by the latest ANZ-Roy Morgan consumer confidence index, which dropped 3.8 per cent in the past week, all but wiping out tentative gains of the previous two weeks, and leaving it below its long run average.
The renewed downturn in confidence came despite last week’s national accounts showing solid economic growth or the June quarter.
ANZ head of Australian economics David Plank said while they also revealed a rise in consumer spending, this was largely supported by a lower savings rate.
“Wages and overall household income growth remained very weak,” he said.
The Deloitte report forecasts 3.5 per cent retail turnover growth for the 2017/18 financial year, compared to just 1.8 per cent over the previous year.
But Mr Rumbens warns retailers are facing competition from the likes of Amazon, widespread aggressive discounting to lure in the consumer dollar and rising energy prices.
“It’s likely retailers aren’t so happy either,” he says.