Consumers have got their groove back, having shaken off their woes about the federal government’s planned budget cuts.
The latest weekly ANZ-Roy Morgan survey shows consumer confidence levels at a seven-month high, rebounding from a slump in April and May sparked by news of spending cuts.
Confidence levels rose 2.4 per cent in the past week, adding to recent gains and giving more weight to the theory that the recent falls were related to temporary shock from the budget.
ANZ chief economist Warren Hogan said confidence levels were now back in line with business confidence.
“Consumer confidence is now back to pre-budget levels and consistent with moderate growth in consumption and economic activity,” he said in a statement on Tuesday.
“The good news is that the headline impact of the budget appears to be temporary and the more enduring features of the economy, such as rising share and house prices, job creation and a stable world economy are now driving consumer attitudes to spending and finances.”
Economists believe that with consumers feeling more confident, retail sales should pick up.
Meanwhile, a separate survey found that business confidence also appeared to be improving, with the number of new company startups rising more than a fifth in the June quarter.
The Dun and Bradstreet survey also found that nearly two thirds of respondents were more positive about the economy than a year ago.
Dun and Bradstreet chief executive Gareth Jones said low borrowing costs were helping improve business confidence.
“Confidence is critical for entrepreneurship and these numbers on business startups indicate there is a building mood of positivity about opportunities in the economy,” he said.
Business failures – those that seek legal relief from creditors or cease operations without paying creditors in full – fell 11 per cent in the June quarter but were up nine per cent for the year.
More than half of the business failures recorded in the June quarter were in the services and the manufacturing sectors.