Australian consumer confidence continued to push higher last week, underpinned by a multitude of factors.
However, politics wasn’t one of them.
That’s the view of ANZ following the release of its weekly consumer confidence index earlier today which rose 0.5% to 115.7, leaving the index some 2.6% above its long-run average.
“This increase likely reflects several factors including last week’s jobs report, strong auction clearance rates, the positive impact from the RBA rate cut three weeks ago, and ongoing gains in equity markets since early April,” said ANZ.
Underlining that an improvement in household wealth helped boost confidence levels during the week, all of the strength was concentrated in perceptions towards personal finances.
“Consumers are more optimistic about their finances with the indicator on ‘finances in the next 12 months’ bouncing 3.4% last week and ‘finances compared to a year ago’ up 1.4%,” noted ANZ.
“This improvement is encouraging as these measures are well correlated with household spending,” it added.
As revealed in the chart below, supplied by ANZ, there’s a reasonable relationship between the survey’s financial situation subindices and levels of household consumption growth, something that bodes well for household spending given the improvement in sentiment levels.
Adding to this view, the separate subindex on whether now was a good time to buy a major household item rose by a further 0.2% to 134.0.
While sentiment around current and future income levels was strong, that wasn’t the case for perceptions towards the economic outlook. They fell.
“In contrast, consumers were a little less optimistic about their views on the economy. The subindex on ‘economy in 12 months’ was down slightly and ‘economic conditions in the next 5 years’ fell 2.2%,” said the bank.
Although the bank notes there were several key factors that helped underpin confidence over the survey period, Jo Masters, senior economist at ANZ, notes that politics may playing a part by not detracting on confidence levels at present.
“Interestingly the current election campaign does not appear to be unnerving consumers despite the fact that the polls remain close,” says Masters.
However, as she points out, there’s still a long way to go. Five more weeks, in fact.
“With another five weeks left in the election campaign, confidence remains vulnerable to any key developments.”
Outside of politics, the same factors that have driven the recent improvement in confidence — stock, property, economic data and expectations for interest rates — will likely remain influential.