A 'Yes' vote for same-sex marriage helped boost consumer confidence last week

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Australian households are feeling upbeat towards the end of the year, as consumer confidence hit a four-month high last week.

ANZ and Roy Morgan’s weekly gauge of consumer sentiment returned a reading of 116.4, up from 114.8 in the prior week and comfortably above the long term average of 112.9.

Gains last week were again driven by more positive views towards the broader economy.

And ANZ senior economist Felicity Emmett said sentiment may also have been helped by last week’s political developments.

“The success of the ‘Yes’ vote in the marriage equality plebiscite, may have provided a boost to confidence,” Emmett said.

Views towards the economy over the next 12 months rose by 2.9%, consolidating a 3.5% gain in the week prior.

The long-term outlook also improved, rising by 2% on the back of a 7% increase last week.

Emmett said the more positive sentiment towards the economy was likely underpinned by more good news on employment, after a steady if not spectacular jobs report on Thursday which saw unemployment edge lower.

“The outlook for employment in the near term remains positive, consistent with elevated business conditions and leading labour market indicators, and this should continue to broadly support confidence,” Emmett said.

NAB’s monthly survey of business conditions hit yet another record high on Wednesday, although the figures were somewhat at odds with recent AiGroup measures of business activity in services, manufacturing and construction.

At the same time, ANZ’s job ads index rose strongly in October which is a positive leading indicator for ongoing labour market strenth.

The net result is that views towards economic conditions have bounced off their September lows, while sentiment towards household finances remains slightly more subdued.

Views towards financial conditions fell by 0.4% last week, the third straight week of falls.

That’s perhaps not surprising given another poor result in quarterly wage growth data last Wednesday, as consumers face additional pressures from rising energy costs and high household debt.

However, despite the falls, views towards current finances remain above the long-term average.

In addition, the longer-term outlook for financial conditions rose by 3% last week after four straight weeks of falls.

Emmett cited the recent cooling in Australia’s major housing market as another factor that will weigh on confidence.

“Last week’s weaker-than-expected wage growth is likely to weigh on consumers, particularly in the current environment of moderating house price growth and high household debt,” Emmett said

“Together, these factors are likely to cap the extent of improvement in sentiment.”

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