The ANZ-Roy Morgan Consumer Confidence Index ticked higher for a third straight week, edging up by 0.6%.
Last week’s gains mean that the index has now moved back to its long-term average, after significant falls in the wake of the federal budget in May.
While the index has risen steadily, concern remains about household’s views toward their current financial situation.
Sentiment towards current financial conditions fell by 0.1% after dropping by 0.4% in the week prior, and that individual measure is now at its lowest level since the middle of 2014.
According to ANZ economists David Plank and Mustafa Arif, it’s most likely reflective a broader shift toward saving taking place in the Australian economy.
“In our view, sentiment has fallen prey to a series of weak wage growth numbers amidst an environment of rising household debt,” they said.
On the positive side, households expressed optimism in the most recent week about their future financial conditions, reporting a 2.6% increase which more than off-set the 1.7% fall in the previous week’s survey.
Gains in the prior week’s survey were driven by optimism about the broader economy, with strong gains in the readings for both current and future economic conditions.
That sentiment cooled slightly in the most recent index, with current economic conditions rising again by 1.4% but views toward future economic conditions fell by 3.2%.
According to Plank and Arif, the consistent gains in the index are reflective of the recent improvement in labour market conditions. They also highlighted a continuing shift underway as weaker consumer sentiment catches up to stronger business conditions.
“We have argued in recent research that consumer sentiment is more likely to rise toward robust business sentiment than the other way around, and this seems to be playing out,” they said.
“We expect confidence will improve further over the medium term if the labour market follows the encouraging signal from strong business conditions and ANZ Job Ads.”