Consumer confidence has surged on the back of a jump in new jobs, despite many Australians missing out on a yearly pay rise.
The weekly ANZ-Roy Morgan consumer confidence index – which points to future household spending – jumped 4.6 per cent to its highest level in eight weeks.
ANZ head of Australian economics David Plank was encouraged by the result, which followed last week’s “monster” jobs report.
The Australian Bureau of Statistics report showed employment lifted by 54,200 in August – the 11th consecutive monthly rise – alongside a fall in the quarterly underemployment rate.
However, a separate survey found more than half of respondents have not had a wage increase in the past year, compared to the almost a third who did.
The weekly Essential Research poll also found one-in-five felt they were under financial pressure, while 43 per cent were managing their household bills but struggling to afford anything else.
Almost half were concerned about electricity and gas bills, followed by about a third who put paying the mortgage and rent as their biggest cost-of-living expense.
These worries could increase if National Australia Bank economists are correct when they say a recent spate of upbeat economic news confirms the next move in interest rates will be up.
NAB is predicting the Reserve Bank’s cash rate to rise in August 2018 from a record low 1.5 per cent to 1.75 per cent, followed by further rises to 2.5 per cent by the end of 2019.
NAB global head of research Peter Jolly concedes these forecasts might change.
“What is important is that NAB is saying we have seen a turning point in Australia’s interest rate cycle driven by a run of better domestic data and continuing strength in the global economy,” he said in a report.