ANZ-Roy Morgan Australian Consumer Confidence eased a touch (-0.6%) in the week ending 24 September. The moderation in confidence was driven by a solid decline in views towards future economic conditions, which was somewhat offset by an increase in the ‘time to buy a major household item’ index. The remaining sub-indices showed little change.
Consumers’ views towards current economic conditions remained unchanged (+0.1%). Meanwhile, consumers seem less optimistic about future economic conditions, with the sub- index falling 6.5% last week. The four-week moving average aggregate economic conditions index remains well below its long-run average (101.5 vs 108.1).
Similarly, households’ views towards current financial conditions showed little change (+0.1%), while confidence around future financial conditions slipped 0.8% last week. The four-week moving average aggregate financial conditions’ index has risen above its long term average (115.6 vs 112.8) through September.
The ‘time to buy a major household item’ index rose 3.3% last week, following a 4.0% jump in the previous week. While encouraging, the four-week moving average remains below its long-term average (132.1 vs 133.8) suggesting that households remain cautious about large expenditures.
Inflation expectations were unchanged at 4.4% on a four-week moving average basis.
ANZ SENIOR ECONOMIST, FELICITY EMMETT, COMMENTED
“Though the headline number showed little change last week, there has been significant volatility in responses over the past few weeks, particularly in consumers’ views towards future economic conditions.
Broadly, consumer confidence appears to be basing around its long term average, supported by ongoing strength in the labour market and a more optimistic view of current conditions. That said consumers appear less optimistic about future conditions. This likely reflects expected stress in household balance sheets and budgets if wage growth remains weak in an environment of moderating house prices and high levels of household debt. These concerns are likely being exacerbated by the prospect of interest rate hikes over the next year or so. As such, we see a pick-up in wage growth as the key to a sustained recovery in confidence.”