Retail Market
Shoppers pass by advertising for products up to 70 per cent off retail prices in a central Sydney shopping mall in Australia, August 4, 2016. Reuters/Jason Reed

In two weeks’ time, there was a significant improvement in the Australian consumer confidence which rose to 121.8 by 3.6 percent from 114.7 on Aug 9. Economists believe the improvement was due to the buoyant sharemarkets and lower unemployment data.

The ANZ-Roy Morgan index of consumer confidence is almost a three-year high since November 2013, following the joblessness rate going down to 5.7 percent. It also came on the heels of an almost 10 percent growth in the benchmark S&P/ASX 200 index, notes Sydney Morning Herald.

Jo Master, senior economist of ANZ, adds that the higher levels of confidence are consistent with another week of solid housing auction clearance rates in Sydney and Melbourne. But she stresses, “The key for the broader economic outlook is whether higher confidence can translate into spending, particularly given high household debt.”

ANZ points out that households’ view of the 12-month economic outlook grew 5.4 percent and five-year by 4.8 percent, with both indices higher than their long-run average of 112.8 for the first time since early 2013, reports Business Insider.

Other measures also registered growth such as current finances by 1.3 percent, views toward finances in the next 12 months by 1.4 percent and a good time to purchase a major household item by 5.1 percent. The last one is the highest level seen in more than one year.

Savanth Sebastian, economist of CommSec, points to super-low interest rates, more affordable petrol prices and lack of inflation across the Australian economy as contributors to lifting consumer confidence. There was also the lift in the Australian currency and improvements in job security.

“However, the key factor behind the lift in confidence has to be the fact that the election is out of the way. Households and businesses can now get back to spending, investing and hiring across the economy,” Sebastian adds.