Daily Commentary BY THE CURVE TEAM –

Confidence Is Key

9th of June, 2020

As the RBA has been reinforcing, restoring confidence is the key to the outlook and this week we get two key updates.

With the economy slowly reopening, the key to activity increasing relies on both the confidence of businesses and consumers. If consumers aren’t confident to resume life as they knew it before the crisis, either due to health or financial concerns, then activity will remain subdued. This will in turn impact businesses confidence which could further prolong the recovery process.

This week we get two key updates on confidence, both from businesses and consumers. The monthly business survey is out today and the hope is that it will show a further pick up in confidence after it lifted off its lows last month. An update on consumer confidence will then follow tomorrow and it should show another small improvement, if the weekly updates are anything to go by.

The data on consumer confidence has so far shown that consumers confidence in their own financial situation for the year ahead has almost recovered to pre crisis levels. However over the same time horizon, their confidence in the economy remains substantially below pre crisis levels. As does their perception of their finances compared to a year ago.

With consumption still the largest component of the economy in Australia, the speed of the recovery and the longer term outlook hinges on consumers.

David Flanagan

Director - Interest Rate Markets