Consumer confidence: broad based consolidation

CONSUMER CONFIDENCE: BROAD BASED CONSOLIDATION

• ANZ-Roy Morgan Australian Consumer Confidence bounced 0.7% last week to 115.8, partially reversing the 1.2% fall in the previous week. The improvement was broad based, with four out of five sub-indices posting gains.

• Households are more optimistic about current and future economic conditions, with the subindices up 1.7% and 0.5% respectively. In four week moving average terms, views towards current economic conditions are at their highest point since late 2013.

• Encouragingly, the ‘current financial conditions’ subindex ended its four week fall, rising 1.7% last week. Views towards future financial conditions continue to improve, rising 0.5% last week following a 1.6% rise previously.

• Sentiment around the ‘time to buy a household item’ was a drag on the headline number, falling 0.7% and entirely reversing the prior week’s 0.5% rise.

   

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

   

  “Consumers remain quite upbeat, with a small but broad based improvement in confidence last week. A terrific comeback by Australia to win the first test of the Ashes certainly didn’t hurt the mood.

   

  While the recent pickup in headline confidence is encouraging, the ‘time to buy a household item’ subindex has slipped back under its long term average – not a good sign for the Christmas season sales. This is not surprising given the number of headwinds consumers face; among other things, higher electricity costs and rising petrol prices.

   

  It’s interesting to see inflation expectations stable at 4.5%, up from 4.2% in June, though this likely reflects the rise in petrol prices (up 14.1% since July) rather than broad based inflationary pressures.

   

  The deluge of data this week, including the Q3 GDP release, may set the tone for confidence in the near term.”