Consumer confidence: stabalising but still below average
Consumer confidence ticked up a modest 0.9% in the week ending 7 May. The index currently sits at 112.3 – just below its long term average.
Households’ views towards the economic outlook, both near and long term, posted solid increases of 5.0% and 4.9% respectively. The five year economic outlook is now at its highest value since mid-February, though both are still well below their long term average.
Households’ views towards their finances were mixed. Confidence around current finances fell 3.3%, more than offsetting the 2.6% rise the previous week. Meanwhile, views about future finances rose a modest 1.2%, partially reversing its previous 3.6% fall.
The ‘good time to buy a household item’ continued on its downward trajectory, falling 1.7% to its lowest level since early 2016.
While the weekly measure of inflation expectations ticked down to 4.4% from 4.6% last week, the four week moving average remains unchanged.
ANZ’S HEAD OF AUSTRALIAN ECONOMICS, DAVID PLANK, COMMENTED:
“The stabilisation in consumer confidence after a period of trend decline is encouraging, albeit at levels below the long term average. This stabilisation may be a sign of an improving labour market. ANZ Job Ads and other business surveys point to further gains in employment in coming months, following on from the strong result in March.
While sentiment towards financial conditions has risen from the recent lows, it is unlikely to recover to the levels seen in the second half of 2016, any time soon. As pointed out by the RBA, household balance sheets are somewhat stressed because of high levels of debt and low wage growth. The outlook for spending remains under pressure as households adjust to this reality.
Today’s retail sales release should provide more information on this front. We expect only a modest pickup in March, following the fall in February. We will then look to see whether this evening’s Budget provides any reason to expect a major move in household sentiment.”
