Dynamic consumers were spending in April

Economists expect retail spending to rise as consumers are supported by solid jobs, rising house prices and extremely low interest rates.

A monthly measure of consumer confidence hit a 12-year high in April, indicating household spending.

However, as Australian life returns to some normalcy, people’s spending habits revert to services like hospitality and domestic tourism, which are not captured by official statistics.

As such, while economists expect preliminary ABS retail spending figures to show a 0.5% increase in April, it will be slower than the 1.3% growth recorded in March.

Consumer confidence subsequently slumped in May after the federal budget gave little encouragement, despite billions of dollars in spending pledged.

Only one in five consumers expect this year’s budget to improve their finances over the next 12 months.

The latest wage figures released this week, showing growth of just 1.5 percent in the year through March, are also unlikely to encourage consumers to rush to stores.

However, the latest labor force figures saw the unemployment rate drop for a sixth consecutive month, reaching 5.5 percent in April.

While overall employment fell by 30,600 in the month, mainly due to a sharp drop of 64,400 part-time workers, full-time staff increased by 33,800 to an all-time high.

It is still unclear what impact, if any, the end of the JobKeeper wage subsidy has had on the labor market.

“The continued decline in the unemployment rate is encouraging and suggests that the end of the wage subsidy has had little impact,” said Taylor Nugent, economist at the National Australia Bank.

The NAB expects the unemployment rate to continue falling to 5 percent by the end of the year, in line with the Reserve Bank’s forecast.

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