Aussie consumers spending more after rate cut and budget announcement
Aussie consumers have had a positive reaction to the RBA rate cut and the announcement of the Federal Budget 2015, by increasing their spending. The ANZ-Roy Morgan Consumer Confidence report said that consumer confidence had jumped 3.6% last week to 114.6 to the highest level since early November.
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According to the Commonwealth Bank’s latest Business Sales Indicator (BSI), nationwide consumer spending grew at a healthy rate in April. Sales are reported to have grown by 0.4% in trend terms in April, following gains of 0.5% in February and March, and annual growth is well above the 5.5% long-term trend rate at 6.4%.
“The good news for businesses is that people are out there spending. With new tax breaks for small businesses announced in the Federal Budget, there’s now a fantastic opportunity for business owners and leaders to capitalise on that mood by investing back in their business,” said Ms Claire Roberts, Executive General Manager, Local Business Banking, Commonwealth Bank.
“Continued strength in the housing market and the recent rate cut have given consumers the confidence to spend, as the latest BSI indicates,” said Mr Craig James, Chief Economist at Commonwealth Bank’s broking subsidiary CommSec.
He further added that we can expect this sales growth to continue at a healthy rate throughout 2015, as measures from the recent Federal Budget trigger a surge in business investment and the global economic outlook improves.
This consumer optimism comes just in time for the EOFY sales, giving businesses the opportunity to ride high on the wave of favourable economic conditions for sales growth.
ANZ Chief Economist Warren Hogan said, “The initial positive reaction of Australians to last week’s Budget is great news for the economic outlook. In contrast to last year’s Budget, consumer sentiment has risen in both the lead-up to and the immediate period after Budget night. The 3.6% weekly rise in measured confidence is almost twice the average weekly move of 2.0%, which indicates to us that the Budget impact has been strongly positive.”