Australian consumers took a more positive view towards their household finances and the broader economy last week.
The ANZ-Roy Morgan consumer confidence index rose by 1.2% to end the year at 116.5 — above the long-run average of 112.9.
In line with the positive result, sentiment towards current and future economic both rose for the third straight week.
Views toward household finances over the next 12 months also improved, rising by 3.6% to offset the previous week’s 2.7% fall.
Adjusted for the weekly volatility, the data shows a broader pickup among Australian households in the second half of the year, said David Plank, ANZ’s Australian Head of Economics.
“Broadly, after a sustained decrease in the first half of 2017, confidence has recovered substantially, most recently due to an upswing in sentiment around economic conditions,” Plank said.
“Views towards overall economic conditions are now at their highest point in 2017, and within striking distance of their long term average. This likely reflects the extraordinary labour market performance through the year, and a pickup in activity over the second half.”
However, although sentiment towards the broader economy has picked up — helped by consistently strong jobs figures — Plank noted that views towards household finances have broadly been in decline.
That’s in line with one of the main themes in the Australian economy this year, as households navigate the combination of low wage growth and high household debt, along with cooling house prices in Australia’s major markets over recent months.
So looking ahead to 2018, Plank cited wage growth as a key driver for consumer confidence — and perhaps by extension, the outlook for domestic consumption in the new year.