ANZ has just released its Roy Morgan Australian Consumer Confidence survey which takes into account the week ending July 13 and it has bounced.
Consumer confidence rose a solid 3.4% to 108.7 last week. Growth in consumer confidence has been slight over the past six weeks but this bounce brings it back to levels recorded at the start of May.
According to the data, consumer confidence now sits 6% below levels recorded before the leaks about the Federal Budget began and 11% off its March peak. ANZ said the bounce is a sign people are recovering from the shock of the Federal Budget and consumers are now looking to the future.
“The improvement in confidence was driven by large increases in household perceptions regarding economic conditions in a year’s time (+6.9%) and personal finances compared to a year ago (+4.3%), with movements in the latter most closely correlated with consumer spending growth,” it said.
There is still risk around consumption growth in the short term with low perceptions around personal finances sticking around, ANZ said, adding it expects consumer spending growth will remain moderate for the rest of the year.
ANZ senior economist Justin Fabo said, “last week’s improvement is a positive sign that this earlier weakness is retracing. Where consumer confidence ultimately settles will be important in informing our view for household consumption and the broader outlook for the economy.”
He also said strengthening consumer sentiment also shows non-mining recovery is on track.
“A permanently lower level of consumer confidence has the potential to adversely impact business confidence and profitability at a time when businesses are reportedly awaiting clearer signs of demand before committing to spend on capital,” Fabo said.