ANZ-Roy Morgan Australian Consumer Confidence bounced 4.6% in the week ending 17 September, more than offsetting the loss over the previous week. The strength in the index was broadly based, with four out of five indicators rising. The index currently sits at 114.8, the highest level in eight weeks.
Consumers’ views towards current and future economic conditions surged, up 5.8% and 12.9% respectively. This broadly offset the sharp falls over the previous week. However, the four-week moving average aggregate economic conditions index remains well below its long-run average (101.1 vs 108.1).
Households’ views towards current financial conditions rose 2.6%, bringing the index to the highest level in 15 weeks. In contrast, confidence around future financial conditions slipped, down 0.3% last week. The four-week moving average aggregate financial conditions’ index has edged above its long term average (115.4 vs 112.8) and seems to be showing some momentum.
Consistent with the improvement in views towards economic conditions, the ‘time to buy a major household item’ index jumped 4.0% last week, but remains well below its long-term average suggesting that households remain cautious about big expenditures.
Inflation expectations were unchanged at 4.4% on a four-week moving average basis.
ANZ’S HEAD OF AUSTRALIAN ECONOMICS, DAVID PLANK, COMMENTED
“The surge in confidence last week is quite encouraging, with confidence likely buoyed by the monster jobs report out last week, which included strong job gains (the 11th in a row) and a drop in the underemployment rate. Looking through the recent volatility, consumer confidence appears to be basing broadly around its long run average.
Sentiment towards financial conditions has risen from the recent lows, and is now back above its long run average. The large increases in full-time employment and the ongoing reduction in spare capacity have implications for wage growth and consequently for household confidence. That said, sentiment towards personal finances is unlikely to recover to the levels seen in the second half of 2016 any time soon, as household balance sheets continue to be somewhat stressed because of high levels of debt and low wage growth.”