Consumer confidence is on the rise, buoyed by improving economic conditions and the relaxation of restrictions in South Australia after its brief COVID-19 lockdown.
The weekly ANZ-Roy Morgan consumer confidence index – a pointer to future household spending – rose 2.9 per cent to 107.5, its highest level since late February.
The index fell in the previous week, which ended an 11-week run of consecutive gains.
ANZ head of Australian economics David Plank noted the ‘time to buy a major household item’ sub-index surged to its highest level since March 1, while perceptions of economic conditions are the highest in more than a year.
“This could bode well for economic activity and spending over the coming weeks,” Mr Plank said releasing the report on Tuesday.
Meanwhile, expansion in the manufacturing sector slowed during November, but growth in new orders suggest a continuing recovery 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.
“The manufacturing sector was broadly stable in November after a return to positive territory in October,” Ai Group chief executive Innes Willox said.
He said Victoria saw its first month of manufacturing expansion since March after the easing of stiff coronavirus restrictions.
“In contrast, South Australia, while continuing to grow, was held back from a more positive result by the lost production in its three-day shutdown,” he said.
“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.”
The reports come ahead of the Reserve Bank’s monthly board meeting, the last gathering until February next year. It does not usually meet in January.
Economists are not expecting anything new from the meeting after the central bank last month cut the rates to its growing number of policy measures, including the cash rate, to a record low 0.1 per cent, and reiterated that rates are unlikely to rise for three years.
It also entered into a quantitative easing program for the first time, announcing $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.
Reserve Bank governor Philip Lowe will appear before the House of Representatives economics committee on Wednesday.