Resilient Australian households are holding steady in the face of multiple headwinds

(Photo by Valery MatytsinTASS via Getty Images)
  • The ANZ-Roy Morgan consumer confidence index climbed for the sixth straight week.
  • It was a strong result in the face of lukewarm data on wages and employment.

ANZ’s weekly gauge of consumer confidence climbed by 0.7% to a reading of 121.6 last week — the highest level since late-January when global stock markets peaked.

The result marks the sixth straight week of gains — evidence of a clear upward trend after the reading wobbled throughout the early part of this year.

It suggests that despite numerous challenges weighing on the consumption outlook, Australian households are holding up pretty well for now.

Some of the recent gains in confidence can be attributed to the income tax cuts announced in the federal budget earlier this month.

But last week’s rise came amid a less positive round of data on wages and employment.

Despite that, the sub-index for views towards household finances over the next 12 months rose by 2% to a three-month high of 110.1. Views towards future financial conditions also rose for the second straight week, and both reading remain above their long-term averages.

Views toward the broader economy dipped slightly, but the measures for both current and future economic conditions were coming off a sharp rise in the week prior.

The positive trend is encouraging given Australian households continue to navigate the challenge of high household debt in an environment of cooling house prices.

And they’re trying to do that with higher energy costs led by the recent increase in petrol prices, while wage growth remains stuck at record lows.

Analysis from ANZ also highlighted a glimmer of hope in last week’s disappointing wage data, in the form of higher bonus payments.

At the same time, the following day’s jobs data showed an uptick in unemployment — a sign of extra slack in the labour market which doesn’t bode well for higher wages.

However, adjusted for weekly volatility, the trend data is clearly showing Australian households are starting to feel more optimistic.

Looking ahead, ANZ’s Head of Australian Economics David Plank cited next month’s GDP data as the next key event.

“The next major domestic data point we are building toward is Q1 GDP on 6 June,” Plank said.

“Construction work done for the quarter (released Wednesday) is an important building block in this release and the only local news of note this week.”

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