Colin Brinsden, AAP Economics Correspondent
(Australian Associated Press)
Australians appear to have got over the threat of the economy sinking into recession, although they still expect the unemployment rate to rise this year.
The latest monthly consumer confidence gauge for February jumped to 2.3 per cent, but still pointed to there being more pessimists than optimists.
Among the components of the Westpac-Melbourne Institute’s confidence survey, expectations for economic conditions for the next 12 months rose 2.8 per cent, recovering the ground lost following the unexpected contraction in economic growth in 2016.
“Recent commentary from the (Reserve Bank) may have helped ease concerns … reaffirming its positive growth outlook,” Westpac senior economist Matthew Hassan says.
The central bank believes the growth decline in the September quarter was the result of temporary factors and will not be repeated when the December quarter figures are released on March 1, avoiding a technical recession.
A new report by think tank the Committee for Economic and Development expects economic growth to lift from two per cent to three per cent in 2017.
CEDA boss Stephen Martin hopes this will result in falling unemployment.
“The outlook for the economy more generally looks somewhat positive provided there are no major economic events internationally,” he said while releasing its 2017 economic and political overview on Wednesday.
However, he is concerned decisions by US President Donald Trump and Brexit have already raised economic headwinds that could have profound effects on Australia.
The Westpac survey found consumers worried about a rise in the unemployment this year, but at the same time 60 per cent thought mortgage rates would increase in the next 12 months.
Only five per cent thought there would be further interest rate cuts.
The latest employment figures for January are released on Thursday.
Economists expect the jobless rate to remain at a six-month high of 5.8 per cent after rising from 5.6 per cent during the past two months.
They also forecast the number of people in employment to increase by 10,000.
In its latest forecast, the Reserve Bank expects the unemployment rate to be 5.75 per cent in June.