Australia remains on course to post its first quarter of economic growth this year and the emergence from recession when the national accounts are handed down on Wednesday.
Despite some last minute tinkering, economists’ forecasts centre on a 2.4 per cent rise in growth during the September quarter, a partial recovery from the massive seven per cent contraction three months earlier.
A splash of economic indicators released on Tuesday also suggest the December quarter could be buoyant with consumer confidence on the rise again, house prices recovering and employment improving.
“All this demonstrates that the comeback is on,” Prime Minister Scott Morrison told parliament via video link from The Lodge, where he is isolating after a recent trip to Japan.
Reserve Bank governor Philip Lowe agreed that recent data have generally been better than expected.
“This is good news, but the recovery is still expected to be uneven and drawn out and it remains dependent on significant policy support,” Dr Lowe said in a statement following the central bank’s final board meeting of the year.
As expected, the board left its suite of monetary policy measures unchanged having cut the cash rate, and other key rates, to a record low 0.1 per cent last month.
It also entered into a quantitative easing program for the first time, announcing in November $100 billion of bond purchases over the next six months with the intent of keeping market interest rates low and, in turn, borrowing costs down.
Dr Lowe said in the past month, the central bank bought $19 billion of government bonds under the program.
He also reiterated the board was not expecting to increase the cash rate for at least three years given the outlook for inflation and unemployment.
The final segments for the September quarter growth result rolled out on Tuesday, including a large $6.3 billion fall in the current account trade surplus to $10 billion.
This resulted in exports detracting a relatively hefty two percentage points from growth in the September quarter.
“Despite this and the lockdown in Victoria, the economy almost certainly expanded, with consumer spending able to rebound sharply as a result of the relaxation of restrictions and control of the disease,” BIS Oxford Economics chief economist Sarah Hunter said.
The Australian Bureau of Statistics latest payrolls report shows jobs grew 0.1 per cent nationally in the fortnight to November 14, but by 0.4 per cent in Victoria.
ABS head of labour statistics Bjorn Jarvis said this was the third consecutive fortnightly payroll jobs rise in Victoria, but they remain 5.4 per cent lower than mid-March when the COVID-19 pandemic began.
Nationally, payroll jobs are down 2.9 per cent since mid-March.
Improving economic conditions has provided a bounce to consumer confidence.
The weekly ANZ-Roy Morgan consumer confidence index – a pointer to future household spending – rose 2.9 per cent to its highest level since late February.
The index fell in the previous week, which ended an 11-week run of consecutive gains.
“This could bode well for economic activity and spending over the coming weeks,” ANZ head of Australian Economics David Plank said.
Growing new manufacturing orders also suggest a continuing recovery in the sector heading into 2021.
The Australian Industry Group’s performance of manufacturing index declined 4.2 points to 52.1 points in November, but held above the key 50 points level which separates expansion from contraction.
“Encouragingly, both new orders and employment continued to grow in November, pointing to the prospect of a continuing recovery as we head towards the end of the year,” Ai Group chief executive Innes Willox said.