Consumer confidence fell slightly by 0.5% to 117.5 in the week ending 5 February, partially unwinding last week’s 0.9% rise. A solid rise in the future economic outlook was entirely offset by a drop in the current finances and ‘now is a good time to buy a household item’ sub-indices.
Households’ views towards current and future finances fell 3.4% and 0.2% respectively. Both indicators remain well above their long run averages, though households’ assessment of their current situation is back to mid-2016 levels.
Households’ views of economic conditions over the next 12 months edged up another 0.3%, after a sharp 5.4% rise last week, bringing the index to its highest level in nine weeks. Households’ views of economic conditions over the next five years posted a solid 4.7% rise more than offsetting last week’s 3.0% decline.
The ‘good time to buy a household item’ sub-index was down 2.8% in the week, taking it to its lowest level in five weeks.
Inflation expectations edged down last week, although the four week moving average rose to 4.6%, the highest value since December 2015.
ANZ’S HEAD OF AUSTRALIAN ECONOMICS DAVID PLANK COMMENTED:
“The increase in households’ views of current and future economic conditions over the past few weeks is quite encouraging. The improvement is likely related to recent positive data around the trade balance, business conditions and house prices. This is consistent with our view that the underlying fundamentals of the economy are in good shape, suggesting a better performance in Q4 after the weak third quarter.
Somewhat offsetting this positive news, households’ assessment of their current situation fell back to the level prevailing through mid-January. While this is still well above the long run average it takes this measure back to where it was in the middle of 2016 after a period of improvement through August/September. This is consistent with the weaker retail sales reports for November and December. As such we will be watching this measure closely to see what it portends for the pace of consumer spending in the early part of 2017.”