RETAIL SPENDING ON THE RISE
Written on the 11 February 2014
CONSUMER confidence has improved slightly in the last week but remains low for the month, in the ANZ-Roy Morgan Consumer Confidence survey.
Similar to business confidence trends, there has been a 0.7 per cent jump back to levels seen during the September election.
ANZ chief economist Warren Hogan says the outlook for Australia’s economy is becoming more positive.
“Despite retracing since the federal election last year, consumer confidence remains firmly above levels seen in 2011 and 2012.
“This suggests household consumption growth should begin to improve,” he says.
Hogan attributes the growth to low interest rates and higher asset prices.
“There are already signs that the low Australian dollar is encouraging domestic retail spending, with retail sales growth strengthening notably since last July.”
The bank forecasts household consumption will slow with mining activity mid-year, but pick-up again next year.
Signs also indicate strength in the construction industry, with an increase in residential and non-residential building approvals.
“Nonetheless, there are some significant uncertainties to this outlook, in particular the extent of decline in the terms of trade over the next year or so.
“ANZ thinks the RBA will continue to leave monetary policy at accommodative levels for some time and forecasts the cash rate to remain at 2.5 per cent this year and gradually increase in 2015.”