Consumer confidence has risen for a third straight week, with Victorians notably more upbeat that the coronavirus outbreak in the state is being brought under control.
The ANZ-Morgan consumer confidence index – a pointer to future retail spending – rose 1.2 per cent and to its highest level in three months.
ANZ head of Australian economic David Plank said there was a notable improvement in confidence in Melbourne and the rest of Victoria.
“The success in getting the COVID-19 new case numbers down is clearly having a big impact on confidence in Victoria,” he said on Tuesday.
Melbourne consumers are now a touch more confident than those in Sydney.
The report comes just days after data showed the unemployment rate unexpectedly fell in August to 6.8 per cent, from 7.5 per cent, when economists had expected a further rise due to the harsh COVID-19 lockdown in Melbourne.
“The positive surprise in the August labour market data may have bolstered sentiment more generally, though it is worth pointing out that confidence is comparable to the level reached during the depths of the GFC,” Mr Plank said.
The central bank and Treasury have forecast the jobless rate to rise to 10 per cent by the end of this year.
Reserve Bank of Australia deputy governor Guy Debelle will address an Australian Industry Group conference on Tuesday on the Australian economy and monetary policy.
His speech comes at a critical time for the economy and could give clues to the central bank’s thinking about already-low interest rates.
The RBA signalled at its last board meeting it “continues to consider how further monetary measures could support the recovery”.
Economic growth figures for the June quarter released the day before that meeting confirmed Australia was in its first recession in nearly 30 years, after output contracted by a hefty seven per cent.
There’s speculation the central bank could trim the current cash interest rate, which sits at a record low of 0.25 per cent.
The interest rate futures market suggests a rate of around 0.1 per cent could be in place by year’s end.
AMP Capital chief economist Shane Oliver says the central bank could ease the cash rate at its next meeting on October 6, to coincide with the release of the 2020/21 federal budget, to signal a “united Team Australia front”.