Australians have been buoyed by the latest strong employment figures rather than fretting about what may or may not happen to interest rates.
The latest ANZ-Roy Morgan consumer confidence index jumped 2.3 per cent to its highest level since February after a week in which data revealed an additional 62,000 people enjoyed the benefit of full-time work.
Treasurer Scott Morrison points out that 240,000 jobs have now been created in the past year, the highest growth seen since before the 2008-2009 global financial crisis
Confidence readings are a pointer to future spending habits.
ANZ head of Australian economics David Plank said the confidence result was encouraging and also reflected the Reserve Bank’s broadly positive assessment of domestic conditions in the minutes of the July 4 board meeting that were also released last week.
“The somewhat confusing commentary around the level of the neutral cash rate appears not to have impacted,” Mr Plank said.
Those minutes discussed the central bank’s latest assessment of what it considers to be a “neutral” cash rate, the rate that neither stimulates or restrains the economy, at a time when inflation is stable and the economy is growing at around three per cent.
This neutral rate is now estimated to be 3.5 per cent compared to the record low of 1.5 per cent now.
However, later in the week deputy Reserve Bank governor Guy Debelle insisted in a speech that the board’s discussion on the neutral rate should not be seen as signalling a shift in monetary policy.
The minutes also gave an upbeat appraisal of the global outlook, which was subsequently backed by the International Monetary Fund’s latest economic update on Monday.
The Washington-based institution is confident the recovery is on a firmer footing and says there is now no question the global economy is gaining momentum.
However, the treasurer concedes while Australia is enjoying a record 26 years of uninterrupted economic expansion, not all Australians have been feeling its benefit in recent years.
“You can’t increase wage by slowing the economy, so you have got to have a plan to grow the economy, which we have,” Mr Morrison told John Laws on Sydney’s 2SM radio.
“We want to create better days ahead. Bill Shorten is trying to play the politics of fear and frustration and cynicism,” he added, noting the opposition leader’s recent thoughts on inequality, tax reform and a new plan to review trusts.
But opposition employment spokesman Brendan O’Connor argued the nation was suffering the lowest wage growth in 20 years and the government was increasing taxes on the bottom 80 per cent of workers, a large proportion of whom would see their penalty rates cut.
“These things are just so unfair for those people who are working hard and trying to make ends meet,” he told Sky News.