Australia appears to be gearing up for a quick turnaround in the economy once coronavirus lockdowns begin to ease, with consumer confidence surging and forward orders for business rebounding.
Reserve Bank governor Philip Lowe is also optimistic that the economy will be growing again in the December quarter after a significant setback in the September quarter due to the outbreak of the Delta variant which has resulted in lockdowns in NSW, Victoria and the ACT.
However, he warned in a speech to the Anika Foundation on Tuesday that the unemployment rate could reach the "high fives" for a short period of time, having struck a 13-year low of 4.6 per cent in July.
"This is a major setback, but it is likely to be only temporary," Dr Lowe said.
But he said there are risks to the outlook should further restrictions be needed.
"These could come in response to new outbreaks of Delta, the emergence of a new strain of COVID-19 or a decline in the potency of the current vaccines," he said.
Meanwhile, consumer confidence saw its biggest weekly jump in around five months, led by a 10.6 per cent increase among Sydneysiders after the NSW government revealed its roadmap out of lockdown after months of restrictions.
The ANZ-Roy Morgan consumer confidence index - a pointer to future national household spending - rose 3.1 per cent.
The National Australia Bank's monthly business survey showed confidence among firms remained in negative territory in August, but trading conditions improved after declining sharply over the previous two months.
Business confidence edged up two points to an index of minus five points in August, while conditions rose by four points to an index of plus 14 points.
"While lockdowns in NSW and Victoria and shorter disruptions across other states continue to impact businesses, trading and profitability conditions improved slightly in August," NAB chief economist Alan Oster said.
Forward orders rebounded after a very weak result in July, while capital expenditure remained relatively solid.
"These are encouraging signs that businesses may see some light on the horizon," Mr Oster said.
"The economy remains well positioned to rebound once restrictions are eased."
The ANZ-Roy Morgan survey also showed consumer inflation expectations eased slightly to 4.5 per cent, after hitting the highest level in nearly three years at 4.7 per cent in the previous week.
"Our research indicates that expectations tend to follow developments in petrol prices and the headline CPI," ANZ head of Australian economics David Plank said.
The consumer price index did strike an annual inflation rate of 3.8 per cent in the June quarter, its highest level in 13 years.
But this was largely the result of the unwinding in stimulus measures introduced during the depths of last year's recession, and price pressures are expected to ease again.
Dr Lowe reiterated he does not expect inflation to be sustainably between the two to three per cent target band before 2024.
Petrol prices rose to the highest level in 20 months last week on average.
However, the consumer watchdog said average retail petrol prices in Australia's five largest cities were the lowest in 22 years during the 2020/21 financial year when adjusted for inflation.
"Low average petrol prices in the last financial year have come after prices reached record lows around the onset of the COVID-19 pandemic," Australian Competition and Consumer Commission chair Rod Sims said.
Australian Associated Press