After three straight increases, ANZ Consumer Confidence remained unchanged at 112.9 last week following the release of the disappointing Q1 GDP result. The headline number masked significant changes in the subindices. Views towards economic conditions fell, whereas confidence in financial conditions rose quite sharply.
Household expectations of current economic conditions dropped a sharp 5.2% last week, almost entirely unwinding gains made over the last three weeks. Views towards future economic conditions also declined 2.6% last week, following a 3.2% fall in the previous week. This subindex currently sits at its lowest level since September 2015.
Household views around current financial conditions jumped 9.4% bringing the index to its highest level in 14 weeks. Views towards future conditions also improved, rising 1.5% last week following a 2.7% rise the previous week.
The ‘time to buy a major household item’ sub-index fell 2.5% last week after four consecutive increases.
The weekly inflation expectations series ticked down to 4.0% last week. The four-week moving edged down to at 4.2%.
ANZ’S HEAD OF AUSTRALIAN ECONOMICS, DAVID PLANK, COMMENTS
Not surprisingly, the lift in confidence stalled last week following the weak Q1 GDP result. Interestingly, although household views towards economic conditions fell, their views towards financial conditions improved quite dramatically. This is encouraging in terms of the outlook for household consumption, although we expect that persistent weakness in wage growth and high levels of household debt will continue to weigh on spending.
Although we do not expect any material improvement in the unemployment rate over the coming year, ongoing strength in business conditions along with moderate growth in ANZ Job Ads suggest that employment growth should continue at a decent pace in the near term. This should broadly support confidence over the coming months; although a return to the levels seen in H2 2016 seems unlikely.”