Confidence is a fragile thing easily lost and difficult to rebuild.
So after the carnage that the Government’s budget wrought on Australian consumer confidence and the time it took to rebuild the fact that the Weekly ANZ – Roy Morgan Consumer Confidence Index has stabilised just above the long run average is good news for the economy, and retailers, as we head to Christmas.
The ANZ reported this morning that confidence was unchanged at 114.6 in the week ending November 2. That’s after the solid 2.7% rise the previous week which the ANZ says brings “the four-week average to its highest level since late April”.
That is when the first Budget leaks occurred.
This is great news for the retail sector as we head toward the Christmas/January spending period and although Australians are still paying a lot of spare cash into their mortgages, confidence is where it is and with “perceptions of household finances compared to a year ago, the subindex most correlated with household consumption,” up another 0.9% last week.
So there is likely to be a catch-up in spending in the months ahead from the drought we have seen recently, as ANZ chief economist Warren Hogan noted in the press release accompanying the data. He did note, however, that “soft income growth will remain a headwind to the household sector into 2015”.
Regardless, this is a good sign for the economic transition.