CANBERRA, AAP – Australians and businesses have had a lot to absorb about the nation’s economic performance in recent weeks.
The economy has already fully recovered from last year’s recession, the unemployment rate has fallen rapidly to 5.5 per cent and is set to head even lower and the nation’s top-tier AAA rating is now deemed safe by one global credit rating agency.
However, despite these positives, Victoria’s 14-day COVID-19 lockdown risks undermining general upbeat confidence among consumers and firms – a risk to household spending, investment and hiring of staff.
The weekly ANZ-Roy Morgan consumer confidence index is due on Tuesday.
It tumbled 2.5 per cent last week on Victoria’s initial seven-day lockdown announcement, retreating from a 19-month high in the previous week.
The monthly National Australia Bank’s monthly business survey for May is also due on Tuesday.
Record highs were set for both business conditions and confidence in April.
Victoria’s lockdown is due to end on Thursday.
At this stage, economists believe as long as the lockdown is not extended any further, the Victorian economy can bounce back pretty quickly, as has been the case in other short-lived lockdowns in other parts of the country.
Figures released on Monday showed job advertisements rose for a 12th straight month, increasing 7.9 per cent in May, and consistent with an unemployment of five per cent. It currently sits at 5.5 per cent.
ANZ economists have recently upgraded their employment forecasts and now expect the jobless rate to be 4.8 per cent by the end of this year and 4.4 per cent by end-2022.
Standard & Poor’s decision on Monday to lift Australia’s credit outlook to stable from negative won’t be captured in the latest confidence surveys.
However, it indicates that Australia’s top-tier AAA rating is now safe and comes on the back of Australia’s strong economic performance out of the pandemic and the expectation the federal government’s budget deficit will reduce.
The negative outlook had meant Australia was at risk of losing its AAA status in the next two years, potentially raising the cost of borrowing for government and big business in overseas markets, which in turn could be passed on to consumers.
Australia remains one of just nine countries to hold a AAA credit rating from the three major rating agencies – the other two being Moody’s Investors Service and Fitch Ratings.