Australian household confidence jumped sharply last week, according to new research released by the ANZ Bank on Tuesday.
Its weekly consumer confidence index, produced in conjunction with Roy Morgan, rose by 3.2% to 117.8, recovering all the losses seen in the previous two weeks.
The index now sits comfortably above its long-run average of 112.8.
According to the ANZ, the gain in the headline index was broad-based with each of the survey’s five subindices rising over the week.
“Households’ view on economic conditions over the next 12 months jumped a sharp 7.8% while views towards economic conditions over the next 5 years rose 5.2%,” it said.
“Consumers’ views towards their finances compared to a year ago rose a solid 3.0% last week – more than offsetting the decline over the previous three weeks. Meanwhile, households’ views towards their current finances edged 1.7% higher.”
The final component within the survey — whether now was a good time to by a major household item — rose by a smaller 0.4%.
The jump in sentiment levels came despite the Reserve Bank of Australia deciding to leave interest rates unchanged at its November monetary policy meeting, a response that is generally seen when a rate cut has been delivered.
While pleasing news, ANZ said that consumer inflation expectations — something that the RBA is watching closely right now given its implications for wage and inflationary pressures looking ahead — slid with the survey’s four-week moving average dipping 0.2 percentage points to 3.9%.
Despite caution over that outcome, something that she described as “somewhat concerning”, Felicity Emmett, chief economist at ANZ, said that boost in sentiment was as a result of “the solid performance of the domestic economy”.
“Although we would caution against over-interpreting this pickup as weekly data have been particularly volatile of late, it appears that concerns over the global outlook have been largely offset by the ongoing solid performance of the domestic economy,” she said.
Looking ahead, the US election outcome, something that will likely be known in a little over 24 hours, will likely be highly influential on household sentiment levels, at least in the short-term.
The separate Westpac-MI Australian consumer sentiment survey for November is scheduled for release on Wednesday, November 9.