New fear unlocked: unemployment worries grip consumers

Fears of a tougher jobs market is starting to muscle out cost-of-living pain as the top concern playing on consumer minds.

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.

Outdoor dining areas of pubs and cafes at The Rocks, Sydney
Confidence among businesses dropped into negative territory in July.

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.

A man walks past a Centrelink branch in Melbourne
More consumers are becoming nervous amid fears unemployment will rise.

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.

License this article

What is AAPNews?

For the first time, Australian Associated Press is delivering news straight to the consumer.

No ads. No spin. News straight-up.

Not only do you get to enjoy high-quality news delivered straight to your desktop or device, you do so in the knowledge you are supporting media diversity in Australia.

AAP Is Australia’s only independent newswire service, free from political and commercial influence, producing fact-based public interest journalism across a range of topics including politics, courts, sport, finance and entertainment.

What is AAPNews?
The Morning Wire

Wake up to AAPNews’ morning news bulletin delivered straight to your inbox or mobile device, bringing you up to speed with all that has happened overnight at home and abroad, as well as setting you up what the day has in store.

AAPNews Morning Wire
AAPNews Breaking News
Breaking News

Be the first to know when major breaking news happens.


Notifications will be sent to your device whenever a big story breaks, ensuring you are never in the dark when the talking points happen.

Focused Content

Enjoy the best of AAP’s specialised Topics in Focus. AAP has reporters dedicated to bringing you hard news and feature content across a range of specialised topics including Environment, Agriculture, Future Economies, Arts and Refugee Issues.

AAPNews Focussed Content
Subscription Plans

Choose the plan that best fits your needs. AAPNews offers two basic subscriptions, all billed monthly.

Once you sign up, you will have seven days to test out the service before being billed.

AAPNews Full Access Plan
Full Access
AU$10
  • Enjoy all that AAPNews has to offer
  • Access to breaking news notifications and bulletins
  • Includes access to all AAPNews’ specialised topics
Join Now
AAPNews Student Access Plan
Student Access
AU$5
  • Gain access via a verified student email account
  • Enjoy all the benefits of the ‘Full Access’ plan at a reduced rate
  • Subscription renews each month
Join Now
AAPNews Annual Access Plan
Annual Access
AU$99
  • All the benefits of the 'Full Access' subscription at a discounted rate
  • Subscription automatically renews after 12 months
Join Now

AAPNews also offers enterprise deals for businesses so you can provide an AAPNews account for your team, organisation or customers. Click here to contact AAP to sign-up your business today.

SEVEN DAYS FREE
Download the app
Download AAPNews on the App StoreDownload AAPNews on the Google Play Store