Consumer confidence: confidence up despite political uncertainty

ANZ-Roy Morgan Australian Consumer Confidence bounced 2.0% last week to 114.8, its highest level in seven weeks. The rise was primarily driven by a lift in sentiment towards economic conditions, only slightly offset by a fall in sentiment towards current financial conditions.

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• Households’ views towards both current and future economic conditions rose solidly, 3.5% and 7.0% respectively. Views towards current conditions are at their highest point in 14 weeks.

   

• Meanwhile, households’ were slightly more pessimistic (-0.9%) regarding the state of their current finances. Encouragingly, their views towards future conditions remained unchanged last week following three consecutive falls. The four week average for the ‘financial situation next year’ subindex currently sits under its long term average (122.6 vs 123.4).

   

• The ‘time to buy a major household item’ index rose 1.0% last week, more than reversing the previous week’s 0.5% fall.

• The weekly value for inflation expectations bounced back to 4.5% last week after coming in at 4.3% the previous week.

   

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

   

  “Consumers appear to be more upbeat after the Melbourne Cup carnival last week. In particular, the improvement in views towards economic conditions despite the current political uncertainty is quite encouraging. Indeed overall economic conditions have broadly trended up since the recent low in mid-September, with sentiment towards current economic conditions recovering to its long term average. This likely reflects ongoing labour market strength.

   

  Wage and employment data out later this week are likely to drive confidence in the near term. We expect an uptick in Q3 wages due to the larger-than-usual minimum wage hike and a positive number on the employment front, suggesting that confidence should receive some support even as political uncertainty rises.”