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(Australian Associated Press)
Consumers are feeling more confident with views around the near- and long-term economic outlook improving in the past week and after the unemployment rate dropped to its lowest level in four years.
The latest ANZ-Roy Morgan Consumer Confidence Index rose 0.8 per cent, to 113.3, in the week to October 22, taking the index back above its long-term average.
Driving the gain was a 4.3 per cent jump in views towards the economy over the coming year, marking its highest level since July and reaching above the long-term average for the first time in two months.
Expectations about the economy in the next five years also rose, by 3.5 per cent.
But consumers’ views about current financial conditions fell for a second consecutive week, while the outlook for future financial conditions dropped marginally, by 0.9 per cent, after two consecutive weeks of gains.
Inflation expectations remained steady at 4.5 per cent for the third consecutive week.
ANZ head of Australian economics David Plank said the strong jobs report released late last week, which showed employment had now risen for 12 successive months, had helped lift the mood.
The report showed that jobs are being created in Australia at the best rate since before the global financial crisis, with the economy adding nearly 20,000 positions in September bringing the unemployment rate down to 5.5 per cent – its lowest level in four years.
Mr Plank said the ongoing reduction in the labour market was offering the prospect of higher wages in time, which will drive a further climb in sentiment.
“Continued improvement in the labour market and an eventual acceleration in wage growth is likely the key to a clear uptrend in consumer confidence,” Mr Plank said.
But, he believes, there has been a “little bit of overshoot” in the official employment figures which could affect sentiment.
“There may be a risk of some weaker employment numbers for a month or two that could stall any uptrend in confidence,” he said.
“We think, however, that any such weakness will prove to be temporary.”