Australians are suddenly confident about where the economy is heading

WILLIAM WEST/AFP/Getty Images)

Confidence towards Australia’s economic outlook is improving, and fast.

Nothing quite demonstrates that view better than the chart below from ANZ Bank.

Source: ANZ

From the bank’s weekly Consumer Confidence report, produced in conjunction with Roy Morgan Research, sentiment towards the economy looking five years ahead rocketed higher last week, jumping 4.2% to 117.8, leaving it at the highest level since 2013.

That’s a stark turnaround to the view conveyed just a few months ago where confidence towards the economy was bleak.

A lag effect from previous strength in Australian labour market conditions, along with an upgrade to the IMF’s global growth forecasts for 2018 and 2019 announced last week, may explain the sharp recovery seen in recent months.

Along with a 4% lift in sentiment towards current economic conditions, it contributed to a lift in the headline consumer confidence index which rose 1.3% to 120.9, leaving it well above its long-run average of 120.9.

Sentiment towards current and expected family finances, along with whether now was a good time to buy a household item, came in mixed for the week, although the moves were not large enough to completely offset improved views towards the economy.

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