Australian consumer confidence edges higher, but lingering fears still weigh on the outlook

(Brendon Thorne / Getty Images)
  • ANZ’s weekly measure of consumer confidence edged higher last week.
  • Despite that, the gains only partially offset a 6% plunge in the week prior, which was caused by a negative shock from political uncertainty.

ANZ’s weekly gauge of household confidence rose by 2% last week, with gains across most of the major sub-indexes.

The result followed a 6% plunge in the week prior — the result of a negative shock from political certainty surrounding the Wentworth by-election.

So in a weekly context, the latest increase only regained one third of the previous week’s fall — a possible indication that lingering fears are still weighing on sentiment.

Still, last week’s gain saw the index creep back above its long-term average.

View towards current household finances rose by 3.5%, while the future financial conditions index rose by 1.5%. That followed declines of 7.1% and 3.5% respectively in the week prior.

ANZ economist David Plank said last week’s increase was “encouraging”, given another selloff in stocks which saw the ASX enter a technical correction.

However, he noted the “time to buy a household item” index was the only major sub-index to post a fall.

The sub-index fell by another 2.5% and is now at the lowest level since 2014:

“The weakness of this category is not surprising given the state of the housing market,” Plank said.

Recent declines in car sales and purchases of “big ticket” household items such as fridges have added to concerns that Australia’s housing market downturn is starting to weigh on the consumption outlook.

And the fact that the index — which is subject to significant weekly volatility — only partially offset the previous week’s fall, suggests the gauge will be worth watching in the weeks ahead for any evidence of a further downward trend.

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