Economic comeback has begun: PM

Colin Brinsden, AAP Economics and Business Correspondent
·3-min read

There are promising signs for retailers as Christmas approaches, with Australians seemingly shaking off the shackles of a torrid year.

Businesses also appear to be finishing 2020 in a more buoyant mood with confidence rising to its highest level since mid-2019.

"We are seeing confidence return," Prime Minister Scott Morrison told reporters in Canberra on Tuesday.

"I do believe we are well on the road to recovery, the comeback for Australia has certainly begun."

However, he conceded some Australians are still facing a tough time.

Mr Morrison announced a further three-month extension to the JobSeeker dole payment supplement, albeit at a lower rate.

It will extend to March 28 next year at a reduced rate of $150 per fortnight, having been due to expire at the $250 rate on December 31.

But Opposition Leader Anthony Albanese questioned why the government was cutting the JobSeeker rate when it expected more people would go on unemployment benefits between now and Christmas.

"Now is not the time to be withdrawing support from the economy," Mr Albanese told reporters.

Treasury and the Reserve Bank expect the jobless rate to peak about eight per cent by the end of the year, compared with 6.9 per cent in September.

The announcement came as the National Australia Bank monthly business survey showed confidence jumping nine points in October to five index points.

The rise was led by a large gain in Victoria, driven by a fall in COVID-19 case numbers and, at that time, the looming end of the lockdown in Melbourne.

However, business conditions in the month showed only a marginal improvement, with employment lagging the recovery in activity.

The conditions index rose just one point to an index of one point as its employment index also gained one point to minus five index points.

NAB chief economist Alan Oster said this suggested there had been "ongoing job shedding".

"Conditions have improved everywhere since troughing in April. However, some industries have seen stronger gains," Mr Oster said.

"Retail has been a strong performer, despite the deterioration in the labour market, likely reflecting the strong income support from the government."

Consumer confidence - a pointer to household spending - is also going from strength to strength.

The ANZ-Roy Morgan consumer confidence index surged 3.2 per cent to 100.2 points in the past week, marking the 10th consecutive increase.

It topped the 100-point mark for the first time since the COVID-19 pandemic began, which indicates optimists again have the upper hand.

A 10 per cent rise in the "time to buy a major household item" sub-index was a key factor in lifting confidence to an eight-month high.

ANZ head of Australian economics David Plank said this could signal a buoyant Christmas shopping period.

"Lower interest rates and the RBA's commitment to support employment could have been triggers for the gain," Mr Plank said.

The Reserve Bank cut the cash rate to a record-low 0.1 per cent last week.

Personal income tax cuts, a falling number of coronavirus cases and the easing of restrictions have also helped to lift confidence in recent weeks.