ANZ-Roy Morgan Australian Consumer Confidence slipped 1.3% last week, following a 2.4% rise the previous week. The details were mixed. Consumers were less optimistic about economic conditions but relatively more upbeat about their current finances.
Households’ views around current financial conditions continued to climb last week, (up 1.4%) after a solid 3.8% rise previously. Consumers were less optimistic about future financial conditions, however. This sub-index fell 0.8% last week, entirely unwinding its previous rise.
Last week saw confidence around current economic conditions drop a sharp 6.2%, largely reversing gains over the previous three weeks. Views around future economic conditions also fell 2.5%. This sub-index remains under its long term average.
The ‘time to buy a major household item’ sub-index was relatively flat (up 0.8%). This sub-index remains well above its long term average.
Inflation expectations edged up to 4.3% on a four-week moving average basis.
ANZ’S HEAD OF AUSTRALIAN ECONOMICS, DAVID PLANK, COMMENTED:
“Stepping back from the weekly volatility, it was encouraging to see a recovery in confidence over June. After a sharp fall in May, confidence rose steadily over the past month and appears to have stabilised around its long term average. The rise in sentiment likely reflects the recent improvement in labour market conditions, notably the fall in the unemployment rate to a four year low.
That being said, we believe the upside in sentiment will likely be capped, given soft wage growth, high levels of household debt and a slowdown in house price growth. The latest result is perhaps indicative of this. As such, despite the recent rise in retail sales, we do not expect the lift in consumer confidence to translate into a marked acceleration in household spending.
Overall, the labour market will remain an important influence on confidence over the coming months. A gradually strengthening labour market along with still accommodative monetary conditions should broadly support confidence over the year.”