Consumer confidence edged higher last week, but Australians remain concerned about their future prospects.
That’s one of the main themes emerging from today’s weekly consumer sentiment survey by ANZ and Roy Morgan.
The index ticked higher by 0.5% after getting back on track with a 3.9% rise in the previous week.
Still, after a rough August — when the citizenship crisis in federal parliament weight on sentiment — the four-week average of 112.1 is still below the long-run average of 112.9.
Data for the survey is collected on the weekend, and based on around 1,000 face-to–face interviews.
Given the prevailing low wage-growth dynamic in the Australian economy, households remain concerned about their finances.
Views towards current and future financial conditions fell last week by 1.7% and 2.0% respectively.
Conversely, consumers were more optimistic about the broader economy for the second straight week, with views towards current and future economic conditions both rising.
ANZ economist Felicity Emmet said those gains were reflective of a steady improvement in business conditions, “but weak wage growth is dampening consumer sentiment”.
“This, in turn, is likely to weigh on household spending over the medium term and act as a constraint on the acceleration in GDP growth,” Emmett said.
And while there’s cautious optimism about the economy, it’s not translating into brighter outlook for the future — at least as far as consumers are concerned.
Here’s the index for future household finances, which has been steadily falling in 2017:
And here’s consumer views towards the broader economic outlook, looking five years ahead. The four-week moving average has been stuck in negative territory since 2014:
So while the Australian economy has managed to transition away from the mining boom to keep its record recession-free streak intact, it appears that there’s plenty of factors still weighing on consumer sentiment.
Emmett noted that with a number of headline data releases scheduled, this week could have a material impact on consumer sentiment. The RBA has its interest rate announcement this afternoon, and Q2 GDP figures will be released tomorrow.
“The Q2 GDP report later this week will provide some clarity, with the potential for the outcome to affect near-term confidence. A number of RBA speakers over the next week could also influence the debate around the outlook,” Emmett said.