Australian consumer confidence rose strongly last week, mirroring the rebound in global stock markets.
The latest ANZ-Roy Morgan consumer confidence index jumped 2.0% to 113.6, taking the index back above its long-run average of 112.7.
All five survey categories registered an improvement with gauges on the economic outlook putting in a particularly strong performance.
Sentiment towards the economy in the year ahead surged by 4.6% while that looking five years into the future rose by a smaller 1.6%.
Compared to a year earlier sentiment towards current personal finances increased by 1.2% while expectations for the year ahead ticked up by 0.2%.
The surveys subindex on whether now was a good time to buy a major household item increased by 2.9%, following a 2.8% increase in the previous corresponding week.
To Warren Hogan, chief economist at the ANZ, the rebound in sentiment suggests that domestic economic strength is overpowering concerns emanating from offshore for the moment.
Consumer confidence improved in February after a weak start to the year. Domestic economic fundamentals appear to be overpowering concerns about the international situation in consumers’ assessment of the economic and financial environment. The heightened debate over tax policies appears to have had little detrimental effect on sentiment last week, although we doubt this reading would have captured the impact of the major parties’ announcements on negative gearing.
The ANZ-Roy Morgan index is now back above its long run average, having risen by just over 2% in the last two weeks. This week, all five sub components of confidence rose, seemingly in reflection of an underlying sturdiness in consumers’ attitudes. This is consistent with recent strong employment outcomes as well as good outcomes in residential property last week. The turnaround in sentiment has occurred despite ongoing weakness in equity markets and concerns about the health of the world economy across most media channels.
While sentiment has now increased over the past two weeks, the timing of the survey, along with recent evidence that stock market movements are having a larger-than-normal influence on overall confidence levels, may have contributed to improvement.
The survey is conducted each weekend meaning movements in the stock market – both domestically and internationally – are fresh in the minds of investors.
Stocks in Europe and the US surged on Friday evening, something that based on recent evidence likely played a role in boosting sentiment levels over the survey period.