Five positive economic signs that point to better conditions ahead

The release of positive economic news this week has raised hopes the last two months of the year will deliver a boost for businesses.

With an interest rate cut last week, retail sales data and a positive consumer confidence reading, there’s good reason to hope that this year’s holiday season may not be as weary as first thought.

And while CommSec economist Craig James warns consumers might not “spend as though there’s no tomorrow”, there is still hope of higher turnover for businesses, and not only those in the retail sector.

“They may spend a little bit more, but no one is going to go crazy in this environment – I would think the RBA has another interest rate cut on the way. It’s just a matter of when.”

Until then, there seem to be enough signs to encourage businesses and consumers that things aren’t necessarily as bad as they seem. Here are five pieces of economic news that should encourage you:

Consumer confidence

Yesterday’s Westpac Consumer Sentiment survey rose by 6.3% from 97.2 points to 103.4 points in November. And although the component tracking family finances over the next 12 months fell slightly, there were good signs – family finances compared to a year ago was up 7.1%, and expectations for economic conditions rose by 18.8%.

And in a good move for spending, the index on whether now is a good time to buy a major household item rose by 1.8%. It’s not a huge leap, but it’s a good sign.

Housing finance

Housing finance figures show the number of commitments made for owner occupied housing rose by 2.2% in September, and that the proportion of first home buyers has now reach its highest point since the first half of last year.

The property market hasn’t recovered yet, but if these figures are anything to go by, then it’s well on its way.

Retail sales

Retail sales rose by a seasonally adjusted 0.4% in September, after a 0.6% rise in August and a 0.8% rise in July. And while some sectors may be falling, with department stores and personal accessory sellers down, others such as food retailing and cafes are enjoying a reprieve.

This isn’t a huge jump, but it’s better than nothing, and retailers should be encouraged heading into Christmas.

Business confidence

Earlier this week NAB released its monthly business survey, showing that although conditions have continued to fall, confidence among businesses has actually increased for the second month in a row – and construction in Queensland is beginning to recover too.

That confidence boost is consistent with speculation the RBA would cut rates, NAB said. And with another cut likely on the way, it’s a good bet confidence will continue to rise.

Myer – believe it or not

Myer’s like for like sales have continued to fall, but there may be some hope here. Yesterday chief executive Bernie Brookes said there has been a pick-up in the number of sales for Christmas items, such as packaged gift sets, along with sales of Christmas decorations and toys.

”It’s a bit like getting early polls on an election, so it can be a good read, but it depends on where the other polls come in,” he said yesterday as he unveiled Myer’s first-quarter sales,” he told Fairfax.

”I hope that is a precursor to a much improved Christmas and you can only look at the early signs.”