ANZ-Roy Morgan Australian Consumer Confidence bounced 2.4% last week, bringing the index to its highest point since early April and above the long-run average. The rise in confidence was broad based, with all subindices posting gains.
The volatility in households’ views around current financial conditions continues, with the sub index rising 3.8% last week.
Consumers were less optimistic about future financial conditions. This sub index rose 0.8% last week, only partially offsetting the 1.7% decline in the previous week.
Confidence around both current and future economic conditions rose solidly (+3.7% and +3.0% respectively). The current economic conditions sub index now sits at its highest point since mid-March.
The ‘time to buy a major household item’ sub-index rose 1.3% last week following a 1.8% fall in the previous week.
Inflation expectations remain unchanged at 4.2% on a four-week moving average basis.
ANZ’S HEAD OF AUSTRALIAN ECONOMICS, DAVID PLANK, COMMENTED:
“The improvement in sentiment across the board last week is quite encouraging. The rise in confidence likely reflects ongoing strength in the labour market and appears to have outweighed consumers’ concerns about the rise in retail electricity prices.
At today’s meeting, the RBA is likely to highlight the improvement in labour market conditions, in particular the fall in the unemployment rate to a four year low. The reduction in spare capacity is encouraging; however it remains high by historical standards. In addition, there is some uncertainty about the drivers of the economy going forward given debt positions of households and a decline in housing construction. As well, we believe that wage growth will likely remain subdued through the year, delaying the return of core inflation to the RBA’s target band.
Overall, the labour market will remain an important influence on confidence over the coming months. While we expect the pace of jobs growth to moderate - given that the official figures have largely caught up with survey measures such as ANZ Job Ads - a strengthening labour market should continue to broadly support confidence.”