Consumer confidence increased for the third straight week – up 0.6% to 112.9, bringing the weekly index back to its long term average. This is the longest sustained rise in confidence this year.
Households’ expectations of current economic conditions improved 1.4% last week, following a solid 3.5% rise the previous week. Meanwhile, views of future economic conditions declined 3.2% last week, partially offsetting the 4.6% rise in the previous week.
Households’ views around current financial conditions edged down (-0.4%). Encouragingly, views towards future conditions bounced 2.7%, more than offsetting the 1.7% fall the previous week.
The ‘time to buy a major household item’ sub-index rose 1.7% last week making this the fourth consecutive rise and bringing the sub-index to its highest value since mid-January.
The weekly inflation expectations series ticked up to 4.3% last week. The four week moving average remains unchanged at 4.3%.
ANZ’S HEAD OF AUSTRALIAN ECONOMICS, DAVID PLANK, COMMENTED:
“The sustained rise in confidence over the last few weeks is quite encouraging and likely reflects the improvement in labour market conditions in recent months. We have argued in recent research that consumer sentiment is more likely to rise toward robust business sentiment than the other way around, and this seems to be playing out. It still has some way to go before the gap is closed, however. As well, the headline number masks the weakness in sentiment around financial conditions. Households’ views about financial conditions have been falling since late January (barring the bounce in April) and are at their lowest since August 2014. In our view, sentiment has fallen prey to a series of weak wage growth numbers amidst an environment of rising household debt.
We expect confidence will improve further over the medium term if the labour market follows the encouraging signal from strong business conditions and ANZ Job Ads.”