Retail spending and job ads are on the rise again, as consumers begin to shake off the post-budget blues.
The positive data comes as the Reserve Bank looks likely to keep interest rates on hold on Tuesday.
Spending rose 0.6 per cent in June, figures from the Australian Bureau of Statistics on Monday show.
While new data from ANZ showed job ads on the internet and in newspapers rose 0.3 per cent in July and were up 4.2 per cent for the year.
The better than expected data reinforced the Reserve Bank and Treausry views that consumer confidence should recover from its federal budget-related slump, which will further boost spending.
The dollar changed little after the release, initially rising slightly to US93.19¢.
Retail spending up
Retail trade figures for June have beat economists’ expectations, with spending rising 0.6 per cent, figures from the Australian Bureau of Statistics on Monday show.
Figures for the June quarter were also stronger than expected, with spending dipping just 0.2 per cent.
The data show that consumer confidence is recovering from its falls around the time of the May budget, which outlined a raft of tough spending cuts and tax hikes, CommSec chief economist Craig James said.
“People are just getting back to normal and shaking off the budget blues,” he said.
“We’ve had some of the clothing retailers who have had to discount some stock and Aussie consumers have lapped up the bargains, but it’s also the fact that confidence levels have improved.
“It confirms to us that Aussie consumers are coming out of the budget-driven downturn and confidence levels are improving and spending levels are improving.”
Job ads up
ANZ chief economist Warren Hogan said demand for new staff was on the rise, albeit at a moderate pace.
Job ads on the internet and in newspapers rose 0.3 per cent in July and were up 4.2 per cent for the year. In June jobs ads climbed 4.4 per cent after a 5.5 per cent fall in May.
The number of online job ads rose 0.4 per cent in July, but those placed in newspapers fell 2.8 per cent, ANZ said.
Cost of living pressure eases
The TD Securities/Melbourne Institute monthly inflation gauge rose by 0.2 per cent in July, following a flat result in June.
The gauge rose by 2.6 per cent in the 12 months to July, following a 3.0 per cent increase in the year to June.
Price rises for gas, electricity and property rates were offset by falls in water and sewerage, clothing and footwear and alcohol and tobacco, the report said.
Underlying inflation, which the RBA focuses on when considering interest rate moves, came in at 2.8 per cent, at the top of the central bank’s two-to-three per cent inflation target band.
No rate hike till next year
The Reserve Bank is expected to go 18 months without a change to its interest rate, but a string of interest rate hikes are expected in the new year.
The RBA last changed the rate in August 2013, cutting it by a quarter of a percentage point. And the next move, a rate hike, is not expected until early 2015.
All 15 economists surveyed by AAP are forecasting the cash rate to remain at 2.5 per cent at the RBA’s board meeting on Tuesday and only one says it will increase before Christmas.
The RBA has kept its cash rate unchanged for more than a year only six times since it began publicly announcing its decisions in 1990.
The interest rate cutting cycle is well and truly over now that the economy is picking up pace and non mining parts of the economy, such as housing construction look ready to pick up where mining left off.
Consumer sentiment is bouncing back after falling sharply on the back of the tough federal budget in May.
Nine of those surveyed by AAP are predicting a hike in the first half of 2015, which would be the first interest rate rise in over four years.