Australian consumer confidence slipped fractionally last week, although remained near levels not seen in over two years.
The latest ANZ-Roy Morgan consumer confidence index fell 0.3% to 116.4, nearly 4% above the series long-run average of 112.8.
According to ANZ, the small decline was largely as a result of a fall in the measure on whether now was a good time to buy a major household item, offsetting mixed performances in relation to the economy and personal finances.
“The change in confidence was almost entirely driven by a decline in consumers’ views towards buying a household item, down 2.3% last week,” said ANZ. “This only partially reverses the solid improvements in this subindex over previous weeks.”
While it partially reversed the significant boost seen in prior surveys, driven largely by the decision by the Reserve Bank of Australia to cut official interest rates to 1.75% in early May, readings towards the economic outlook and personal finances held the gains achieved following the release of Australia’s March quarter GDP report earlier in the month.
“Consumers’ views of the economic outlook also remain optimistic. Views towards ‘economic conditions in the next 12 months’ rose 0.3%, and views towards ‘the economy in the next 5 years’ edged down 0.1%,” said ANZ.
“Views towards their current finances remain upbeat, with the subindex rising a solid 1.7% last week. This was only partially offset by weakness in the subindex on ‘finances in the next 12 months’, which fell 0.3% following solid rises over the previous two weeks.”
Felicity Emmett, head of Australian economics at ANZ, called the result — which followed a sharp spike previously — “robust”.
“Confidence consolidated last week after spiking in the previous one. Confidence has remained resilient over the past few weeks, despite the long election campaign and the fact that the polls remain particularly close. At current levels, well above its long run average, confidence looks quite robust,” she said.
“It’s particularly encouraging that consumers remain upbeat about their current financial situation given that this index is a reasonable indicator of household consumption. It suggests household spending will likely continue to post solid growth in Q2.
“An improving labour market is a key driver of consumer optimism. On this front, this week’s employment data will be important for the near term direction of consumer confidence.”
As Emmett alludes to, Australia’s May jobs report will be released by the Australian Bureau of Statistics on Thursday this week, a release that can sometimes be influential on consumer confidence levels given its impact on perceptions towards job security and wage inflation.
According to a survey conducted by Thomson Reuters, the median economist forecast is looking for an increase in employment 15,000, something that would be a strong result given a noticeable slowdown in employment growth in the early parts of 2016.
Keeping with the the confidence theme, markets will also receive the latest Westpac-MI consumer sentiment report for June at 10.30am AEDT on Wednesday.
In May confidence soared by 8.5%, the largest one-month percentage increase seen since June 2010.