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Colin Brinsden, AAP Economics Correspondent
(Australian Associated Press)
Optimists continue to have the edge over pessimists among Australian consumers – but only just.
The latest Westpac-Melbourne Institute consumer confidence index rose just 0.2 per cent in March, barely putting a dent in last month’s 2.3 per cent drop that was associated with a wave volatility in global share markets.
Commonwealth Bank senior economist John Peters said ongoing feeble wages growth, ever-rising living costs – such as electricity prices – and mountainous household debt appear to be the big picture issues continuing to give consumers the jitters.
“Not even recent sustained and robust jobs growth is boosting consumer spirits,” he said.
The biggest drag in the survey was the sub-index on views on the economic outlook over the next five years, which tumbled more than four per cent.
Westpac senior economist Matthew Hassan thought this pullback may reflect increased tensions around global trade following US President Donald Trump’s plan to impose a tariff on steel and aluminium imports.
This tied in with what news respondents recalled having seen in the past three months.
The survey found news on ‘international conditions’ at its highest in two-and-a-half years and was viewed as significantly more negative than in December.
The highest recalled topic was news on ‘economic conditions’ and again was assessed as more negative than three months ago.
Since first announcing the tariffs, President Trump has given Australia an exemption.
In its interim economic outlook, the Organisation for Economic Co-operation and Development warned trade protectionism remains a key risk because it would negatively affect confidence, investment and jobs.
“Governments of steel-producing economies should avoid escalation,” it said in the report released in Paris on Tuesday.
The report otherwise gave a glowing outlook for the global and Australian economies.
It now expects world growth to be brushing a four per cent pace over this year and next, an upgrade of 0.2 and 0.3 percentage points respectively from predictions its made in November.
This follows an estimated 3.7 per cent expansion in 2017, the strongest outcome since 2011.
Key factors behind its upward revisions reflect tax reductions and public spending increases in the US announced over the past three months and a substantially easier fiscal stance by Germany.
It also raised Australian growth forecasts to three per cent for 2018 and 2019 and follows last week’s national accounts, which showed growth of just 2.4 per cent for 2017.
Stronger world growth has been accompanied by solid job creation with the OECD-wide unemployment rate having finally fallen below its pre-global financial crisis level.
“Despite steady declines in unemployment, wage growth generally remains weak,” it said.