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Tuesday, 2 June 2020

Consumer confidence up for record 9th week

Confidence gains

Consumer confidence jumped from a reading of 92.7 to 98.3, making for a record 9th consecutive gain.

Current economic conditions soared +15.7 per cent, and future financial conditions expectations are now closing in on their long-run average as the economy reopens for business. 

Recession locked in?

Australia recorded its greatest ever current account surplus in Q1 of $8.4 billion, driven by international trade disruption and a sharp drop in imports. 

The export side of the ledger remained very strong, meaning a contribution of +0.5pps to GDP in the first quarter of the year. 

There's still a chance, therefore, that GDP could print flat in Q1 and Australia could dodge a technical recession.

However, there was also a sharp drop in inventories which will still quite likely pull us into negative territory.

In other news, net foreign debt has declined since September 2019. 

Company profits remained remarkably strong, overwhelmingly due to mining earnings.

And wages and salaries disbursed were unchanged at +0.0 per cent, or +3.8 per cent over the year.

The wrap

Overall, we'll have to wait and see what the National Accounts bring, but it could be tantalisingly close to a flat result for Q1, although Q2 will obviously be very sharply negative.

More importantly for households, light is being seen at the end of the tunnel thanks to the excellent containment of COVID-19, and therefore economic growth, consumption, and employment should resume in Q3. 


HSBC cut its 2-year fixed rate mortgage to 2.09 per cent yesterday.

The Reserve Bank Board will meet this afternoon and is widely expected to keep the cash rate on hold at 0.25 per cent.