- Australians are suddenly feeling a lot more confident about the economy, according to the latest ANZ-Roy Morgan Consumer Confidence Index.
- Confidence is now higher than average, perhaps helped by hopes for additional tax cuts in the federal budget.
- Sentiment levels softened in the second half of last year, coinciding with a slowdown in household spending over the same period.
Australians are suddenly feeling a lot more confident about the economy, according to the latest ANZ-Roy Morgan Consumer Confidence Index.
Sentiment towards current economic conditions surged by 8.1% last week, helping to drag overall confidence levels up by 2.6%, leaving it at the highest level in a month. Views on the economy in the year ahead also lifted a touch, rising by 1.3% from seven days earlier.
Improved views towards the economy also helped to lift sentiment towards whether now is a good time to by a household item which rose by 5%, recovering after trending downwards in the past couple of months.
Curiously, the the broader improvement was not helped by views towards current family finances which actually fell by 1.5% last week. Views towards finances in the future did improve a touch, lifting by 0.4%, although that followed a large 3.3% decline in the previous week.
Despite subdued readings on family finances, David Plank, Head of Australian Economics at ANZ Bank, said improved confidence may reflect optimism towards further income tax cuts in today’s Federal Budget.
“Consumers head into the Budget with confidence above average and at the highest level for some weeks,” he said. “Talk of additional tax cuts and spending may be supporting sentiment. News that job vacancies are continuing to lift may also have provided a boost.”
While one week does not make a trend, the improvement in confidence levels will likely be welcomed by policymakers at the Reserve Bank of Australia (RBA) who continue to describe the outlook for household spending as a “key source of uncertainty” for the economy in the period ahead.
Confidence levels softened in the second half last year, coinciding with a steep deceleration in household spending over the same period. The latter was a major factor behind the sharp slowdown in the broader economy late last year.
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