After jumping to a 15-week high last week, consumer confidence was little changed in the week ending 15 January, edging down 0.7% to 119.3. The decline was driven by some deterioration in households’ views about their finances. Providing some offset was an improvement in households’ views about the economic outlook and ‘time to buy a major household item'.
Households’ views towards their finances compared to a year ago fell 4.8%, more than reversing the gain over the previous week. Meanwhile, after a sharp bounce the previous week, households’ views towards their future finances edged just 0.7% lower. Both indicators remain well above their long run averages.
In contrast, while households’ views of economic conditions over the next 12 months were flat, views of the economic outlook in the next five years rose 0.6%.
Household views on whether ‘now is a good time to buy a household item’ posted another solid gain, rising by 1.1% last week. The index – which tends to be a little higher in January – now sits at the highest level in almost five months.
The four week moving average in inflation expectations edged higher for the second consecutive week, up to 4.3% last week from 4.0% in mid-December. Rising inflation expectations likely reflect the recent acceleration in petrol prices (Figure 8).
ANZ SENIOR ECONOMIST JO MASTERS COMMENTED:
“Confidence consolidated last week after the previous week’s spike. At current levels, confidence looks quite robust and continues to suggest a positive outlook for spending. The recent rise in views on whether ‘now is a good time to buy a household item’ likely reflects ongoing strength in the housing market.
It’s interesting to see the pickup in inflation expectations, although this most likely reflects the recent acceleration in petrol prices rather than broad-based inflationary pressures.
The labour force report on Thursday has the potential to impact consumer confidence this week. We are expecting decent job growth in December, but confidence remains vulnerable to a weaker than expected report.”