Key indicators of Australian firms’ investment intentions have improved and a recovery in non-mining business investment is underway. There has been early improvement in business profitability and resilient confidence.
Encouragingly, consumer confidence has also bounced back to its pre-Budget level which supports an improving, albeit moderate, outlook for household spending growth.
Meanwhile. the global economic backdrop continues to improve, a key factor of which is the US economy. ANZ has been relatively optimistic on the US growth outlook for some time and the incoming economic indicators support that view. ANZ expects the Federal Reserve to start to increase the official funds rate in March 2015 but to be cautious with the move. The transition towards solid, self-sustaining non-mining growth in Australia is underway but remains relatively slow.