Less chatter about interest rate hikes, tax cuts and power bill rebates from state and federal governments has boosted optimism concerning family finances, surveying suggests.
Improved attitudes towards household budgets was more than offset by evaporating confidence in the economy, weighing on the already-pessimistic mood captured in Westpac and Melbourne Institute's consumer sentiment survey.
Confidence among businesses dropped into negative territory in July. (Bianca De Marchi/AAP PHOTOS)
Evolving consumer attitudes reflect a barely-growing economy and moderating inflation as well as a federal government under pressure to prove its economic strategy is right for the times.
In the sub-index tracking sentiment expectations for the economy over the next 12 months, Tuesday's survey recorded a 2.6 per cent fall.
Westpac head of macro-forecasting Matthew Hassan said this likely reflected the lacklustre June quarter national accounts.
"The less confident outlook for the economy is also sparking fears about potential job loss," the economist said.
More consumers expected unemployment to climb, with the relevant gauge up 3.7 per cent and now sitting materially above it's long-run average.
Confidence among businesses also sunk back into negative territory in July and conditions fell back below average.
Commenting on National Australia Bank's monthly survey, chief economist Alan Oster said the results reflected weakness in the private sector and broader economy, including the labour market.
"That suggests the period of very strong private sector labour demand seen throughout the post-COVID period may be coming to an end," he said.
The jobs market has proved resilient in an otherwise troubled economy.
The jobless rate has been ticking higher yet remains at 4.2 per cent, below long-run averages.
Holding onto as much labour market strength as possible is an express commitment of the Reserve Bank of Australia, which has been trying to get inflation down without causing a recession and the subsequent job losses.
More consumers are becoming nervous amid fears unemployment will rise. (Julian Smith/AAP PHOTOS)
The government's budget strategy has also come under renewed scrutiny, following the Treasurer Jim Chalmers' remarks on higher interest rates "smashing" the economy.
The opposition has been accusing Labor of trying to shift blame onto the central bank for economic troubles, arguing Commonwealth policies are making the RBA's job harder.
Shadow Treasurer Angus Taylor kept up the line of attack by rejecting government concessions on long-awaited RBA reforms, arguing now was not the time to pursue changes given government rhetoric.
"How can you support legislation for reform of the Reserve Bank when the government has spent the last week before introducing the legislation bagging the Reserve Bank?" Mr Taylor said on Tuesday.
Dr Chalmers said the reforms were designed to strengthen the RBA and deepen its economic expertise.
Opposing the changes was "irresponsible", the treasurer said.
Dr Chalmers said he had negotiated with the shadow treasurer in good faith and shifted on his demands for continuity across the new interest rate board and the existing one.
"The Reserve Bank reforms are all about making the RBA more independent, not less independent, and the position that the coalition has taken shows that it has absolutely no idea and absolutely no economic credibility," he told reporters on Tuesday.
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