Australian consumer confidence bounced last week, although it remains well below the levels seen earlier this year.
The ANZ-Roy Morgan consumer confidence index popped 1.6% to 113.8, snapping a three-week losing streak in the process.
The index now sits fractionally above its long-run average, meaning that Australians, collectively, are now a little more confident than usual.
ANZ said the rebound was broad based, with four of the survey’s five subindices rising during the week.
“Households’ views of the 12-month economic outlook rose 2.7% last week, after a 3.3% fall the previous week. Consumers were also more confident regarding future economic conditions, with the index rising a solid 2.8%,” it said.
Views on finances looking 12 months ahead lifted 3.0%, while those on whether now was a good time to buy a major household item rose by a further 0.5%, building upon the 1.7% increase recorded in the previous two week’s.
The one area of weakness came from views towards current finances — an indicator that has a reasonable track record in predicting household consumption patterns — which fell by 0.9%, largely reversing the improvement of the previous week.
“The broad-based improvement in confidence last week is encouraging, particularly given the fall in domestic equity prices early in the week and uncertainty surrounding US policy,” said Felicity Emmett, senior economist at ANZ.
Despite the bounce registered last week, Emmett remains cautious on the outlook for consumer spending, particularly given the pullback in confidence levels since the beginning of the year.
“With wages growth persistently low and spare capacity in the labour market still elevated, there is a risk that households are becoming less confident about the medium term outlook for income growth in an environment of high household debt,” she says.
“If this is the case, this could pose a downside risk to the spending outlook. In this regard, the evolution of consumer confidence will be important to gauge the prospects for consumption growth.”