ANZ’s consumer confidence index has staged a modest comeback after falling sharply in budget week.
The index rose by 1%, not enough to offset the prior week’s 2.6% drop which sent the index to its lowest level since September 2015.
That takes the reading to 110.9, still below the long-run average of 112.9 as Aussie consumers feel the effects from low wage growth and high house prices.
ANZ economists David Plank and Mustafa Arif said that consumers were likely buoyed by another strong jobs report last week.
“The modest rise in confidence is quite encouraging, especially given the negative news flow surrounding President Trump and the fall in domestic equity markets,” they said.
Four out of the five data points that comprise the index rose in the week.
There were modest gains in households’ expectations towards current and future economic conditions. However, both measures gained by less than 1% after falling by around 5% in the week before.
Notably, respondents’ views towards their current financial conditions fell by 0.8% which brings that measure to its lowest level since August 2014.
It’s a sign that low wage growth combined with stricter lending standards has households refocusing their efforts on saving rather than consumption.
“We will be closely watching what happens to the household saving rate in the Q1 GDP data due to be published in early June. We expect it will rise in response to concerns about weak wages growth,” Plank and Arif said.
The economists were relatively optimistic about the outlook, expecting survey-based employment measures to “catch up” to the official ABS data.
“This should broadly support confidence, although we are unlikely to see a rapid increase given ongoing low wage growth,” they said.
“Additionally, in the near term, confidence remains at risk to any changes in the global political environment.”