Confidence: treading water

ANZ-Roy Morgan Australian Consumer Confidence edged down 0.4% last week, following a 1.3% fall the previous week. The details were mixed. Consumers were quite optimistic about their financial conditions next year, but were less upbeat towards the current financial situation.

• Households’ views around current financial conditions fell 1.8% last week, following two straight weekly rises. Views towards future conditions were more upbeat with the subindex rising a solid 3.7%. Both sub-indexes remain close to their long term averages.

   

• Last week’s events prompted no change in consumers’ views towards current economic conditions. However, views around future economic conditions fell 1.6%, following a 2.5% decline previously. Both sub-indexes remain under their long term averages.

   

• Despite slipping 2.3% last week, the ‘time to buy a major household item’ sub-index remains well above its long term average.

• Inflation expectations were unchanged at 4.3% on a four-week moving average basis.

   

  ANZ’S HEAD OF AUSTRALIAN ECONOMICS, DAVID PLANK, COMMENTED:

   

  “In trend terms, confidence has remained stable around its long term average for the past 3 weeks. The recovery in confidence seen over June, likely due to the improvement in labour market conditions, appears to have ended. We expect confidence to tread water around the current level in the near term, barring any major developments.

   

  The employment report out on Thursday has the potential to move confidence. We expect the June employment report to show an above consensus increase in jobs, though we don’t expect it to be quite as strong as the past three months, given that we believe the catch up between official and survey based measures is largely complete.

   

  That said, some leading indicators such as capacity utilisation, point towards continued strong improvement in labour market conditions. If jobs growth continues at the pace seen in recent months, it has the potential not only to boost confidence but perhaps also challenge our view on the stable course for monetary policy in 2018.”