Australian consumer confidence fell slightly last week as improved sentiment towards the economy offset renewed concerns surrounding family finances.
The headline ANZ-Roy Morgan consumer confidence index dipped 0.6% to 113.4, leaving it just above its long-term average of 112.9.
The survey’s four-week moving average — a better indication on the overall trend in confidence levels — stood at 113.0 for the week, continuing to trend lower from levels earlier this year.
“Consumers were more optimistic about both current and future economic conditions, up 2.5% and 2.0% respectively,” said Felicity Emmett, senior economist at ANZ.
“Views towards current economic conditions have improved since the low point in May. However sentiment towards both current and future conditions remains below long run averages.”
Offsetting improved view on the domestic economy, something Emmett put down to ongoing strength in the labour market, sentiment towards family finances took a hit, giving back much of the increase reported in the previous week.
“Households’ views towards both current and future financial conditions fell 1.6% last week,” says Emmett.
“Stepping back from the weekly changes, confidence in financial conditions remains above its long term average, which is encouraging given the headwinds households face in terms of high debt levels, low wages growth and higher energy costs.”
This chart from ANZ shows the divergence between the survey’s readings on the economy and family finances over recent years.
Australians are feeling pretty confident about their finances but not about the current or future state of the economy.
However, despite upbeat views on the health of family finances, the final component in the survey — whether now was a good time to buy a household item — fell 3.3% during the week, casting renewed doubt as to whether stronger readings on family finances will translate to actual spending at the shops.
“[The] index remains below its long term average, consistent with our view that retail sales are likely to disappoint in August, after a period of strength earlier in the year,” says Emmett.
ANZ is currently forecasting that Australian retail sales fell 0.2% in August, continuing to weaken after a purple-patch in the June quarter of this year.
The ABS will release the report on Thursday, October 5.