CANBERRA, AAP – The prospect of leaving coronavirus lockdowns has lifted the mood among Sydneysiders and Melburnians, but confidence in other parts of the country has turned sour.
Overall, the ANZ-Roy Morgan consumer confidence index – a pointer to future household spending – rose 0.9 per cent in the past week.
It was the fourth consecutive weekly rise, taking the index to its highest level since mid-July, but at an index of 104.6 it is still some way off its long-run average of 112.5.
“With Sydney and Melbourne headed towards re-opening in the next few weeks, confidence increased in both cities by 4.4 per cent and 1.5 per cent respectively,” ANZ head of Australian economics David Plank said.
However, confidence in regional Victoria fell by 4.1 per cent, and there was a 2.1 per cent decline in Adelaide, while Brisbane tumbled by nine per cent and Perth dropped by 6.2 per cent.
Meanwhile, Australia’s construction industry saw something of a bounce in September as strong engineering activity more than offset further declines in house building and commercial construction.
The Australian Industry Group/Housing Industry Association performance of construction index rose 14.9 points to 53.3 in September, with the move above 50 indicating the sector is back in expansion territory.
“Looking ahead, the further easing of restrictions, and the resumption of work put on hold should see more decisive improvement in the sector in the months ahead,” Ai Group chief policy advisor Peter Burn said.
Economists expect the Reserve Bank of Australia will stick to its outlook of keeping the cash rate at a record low until 2024 when its board meets later on Tuesday.
The so-called “shadow RBA board”, comprising economists and academics from the Australian National University, are 100 per cent behind sticking to keeping the cash rate at a record low 0.1 per cent.
It says the lockdowns in the two most populous states, NSW and Victoria, have clearly stalled the economic recovery.
“But high vaccination rates, a phasing-out of stay-at-home orders, and the prospect of domestic, and even international, travel restrictions easing, should reignite the domestic economy heading into the Christmas period,” it said.
Economists will be looking for any clues in RBA governor Philip Lowe’s post-meeting statement as to when curbs on home lending may be introduced to take some of the heat out of Australia’s housing market.
The Council of Financial Regulators, of which the RBA is a member, warned last week that while lending standards have not dropped so far, they are considering policies to curb activity before debt-laden households become a risk to the economy.