Australian consumer confidence slipped fractionally last week, with optimism towards the future offsetting weakness about current conditions.
The ANZ-Roy Morgan consumer confidence index dipped 0.3% to 117.5, adding to the 2.2% decline registered in the previous week.
Despite the back-to-back falls, importantly, the index remains well above its long-run average of 112.8.
Confidence is still strong, just not as much as it was previously.
According to ANZ, the report was “mixed” with indicators of current conditions falling slightly while forward-looking indicators posted gains.
“Consumers’ views towards their current finances fell 0.6%, while views towards future finances rose 0.7%, the bank said, adding ‘both of these sub-indices remain well above their long run averages’.”
Mirroring sentiment towards finances, perceptions towards the economy were also mixed with “the dip in consumer confidence largely driven by a 1.5% decrease in consumers’ views of the 12 month economic outlook”.
“Even so, consumers remain relatively upbeat about the longer-term economic outlook, with the 5 year ahead index rising 0.7%,” ANZ said.
Despite the lift in sentiment towards the long-term economic outlook, the survey’s subindex, at 111.7, remains below the series average of 115.0.
The final subindex that makes up the survey — whether now was a good time to buy a major household item — dipped 0.8%.
Jo Masters, senior economist at the ANZ, expressed disappointment towards the result, particularly as it followed a string of robust domestic economic data released before the survey was conducted.
“The fall in consumers’ views toward current economic conditions is a little disappointing given the solid run of domestic data last week,” she said.
“That said, consumers remain positive about the longer term outlook.
“Importantly, consumers’ views towards current and future financial conditions remain above their long term trend, likely reflecting strength in the housing market, accommodative monetary conditions, and ongoing employment growth.”
Given the strength in August’s Australian retail sales report — released last week — Masters also expressed optimism “that above trend consumer confidence may be translating into stronger spending”.
After a weak run for retail sales, and weak consumption growth in the June quarter GDP release, policymakers will no doubt be hoping that the lift in August is a sign of things to come.
The next retail sales report from the ABS, including quarterly sales volumes, is scheduled to be released on November 4.