Australian consumers are holding strong in a tough environment

Photo by Victor Fraile/Getty Images

Australian households are staying resilient amid an extended house price correction and persistently low wage growth.

The ANZ-Roy Morgan weekly consumer confidence index rose by 2.1% to 118.4 — the highest level in five weeks.

However, while four of the five sub-indexes climbed, views towards current financial conditions over the next 12 months fell by 2.4%

That partially offset a 4.6% bounce the week prior, although views towards current finances had declined for three straight weeks before that — evidence of lingering pressure on household budgets.

Elsewhere, views towards future financial conditions rose by 1.6% to extend last week’s gains.

And consumers were more optimistic about the broader economy, as sentiment towards current and future economic conditions rose by 3.4% and 3.2% respectively.

ANZ’s Head of Australian Economics, David Plank, noted that confidence rose despite an underwhelming employment print last Thursday, which indicated that Australia’s unprecedented jobs boom is showing signs of cooling off.

“Forward indicators of employment remain quite positive, however, suggesting that the underlying strength of the labour market is more robust than the February/March data implies,” Plank said.

He also noted a potential budget-effect, with the federal budget now just two weeks away on May 8th. The ANZ confidence index often experiences increased volatility around budget time.

“It is possible that increasing talk about personal income tax cuts as the Commonwealth budget approaches is boosting sentiment,” Plank said.

He added that the positive result was likely driven by the recent resilience of the Australian stock market, and an apparent de-escalation of US-China trade tensions.

The latest ANZ data follows the monthly reading of consumer sentiment by Westpac in mid-April.

While that measure showed the number of optimists still outweigh pessimists, Westpac said there were signs the rally in confidence over the second half of 2017 was starting to fade.

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