Consumer confidence jumped sharply (up 4.7%) this week following a disappointing performance the previous week (down 2.3%). The increase in confidence was broadly based with all five sub-indices posting gains.
Households’ views of current finances rose a sharp 9.3% in the week ending 26 February, more than reversing last week’s 7.5% fall. Sentiment towards future finances also rose a solid 6.3% bringing the index to its highest value since March 2016.
Households’ views around economic conditions also improved. Sentiment towards the 12 month outlook bounced 4.4% while sentiment towards the longer term outlook rose a more modest 1.7%.
The ‘good time to buy a household item’ sub-index rose for the third straight week (up 2.5%) bringing the index to its highest value in six weeks.
ANZ’S SENIOR ECONOMIST JO MASTERS COMMENTED:
“The marked improvement in consumer confidence this week is quite encouraging and is consistent with the strong start to the year in the housing market and elevated domestic equity prices.
Importantly, views towards current financial conditions recovered strongly after the surprisingly large fall the previous week. Overall, consumers have remained upbeat about their finances over the past six months with the index holding well above its long term average despite ongoing soft wage growth.
Indeed, we expect this week’s December quarter GDP data to confirm that private consumption bounced back from the soft reading in Q3. Overall, the GDP report is expected to show a healthy rate of growth in the economy, after the surprising contraction in Q3, and confirmation of this could support consumer confidence, particularly around the economic outlook, in weeks to come.