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‘Turnbull effect’ wearing off but sentiment still strong

An Australian chief economist believes recent data could indicate that business conditions are being driven by more than a change in leadership.

BetaShares Chief Economist David Bassanese pointed to NAB’s monthly business survey, which showed a slight lift in business confidence in November.

“We've had encouraging news of a further modest lift in business confidence in the NAB monthly business survey, even though the so called ‘Turnbull effect’ is beginning to wear off, according to political polling”, Mr Bassanese said.

According to the economist, the recent data suggests there may be important underlying economic drivers supporting business conditions, most notably the strength in home building, lower oil prices and weakness in the Australian dollar.

“In this light it would not surprise to see a rebound in the Westpac measure of consumer confidence given the drop in petrol prices and the unemployment rate over the past month,” Mr Bassanese said.

“Given the ongoing strength in labour hiring indicators, much of the lift in employment last month should also be retained in Thursday's employment report, though the unemployment rate could nudge back to six per cent.

“All up, this week’s data is likely to confirm the RBA's decision to leave interest rates on hold in November and December notwithstanding the decision by major banks to unilaterally raise their mortgage rates."

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