Australian consumer confidence rebounded strongly last week, bucking the trend seen since the beginning of the year.
And higher house prices were likely a factor, presumably driven by respondents who already own a property or three.
The latest ANZ-Roy Morgan consumer confidence index popped 3.3% to 114.8, leaving it above its long-run average of 112.9.
“We suspect that solid fundamentals reasserted their influence last week, after the dampening impact of the Queensland floods in the previous week,” said David Plank, head of Australian economics at ANZ.
“The strength in the housing market is likely providing some support to confidence, with house prices continuing to rise quite strongly and buoyant auction clearance rates suggesting that prices may not yet have peaked.”
That assessment fits with the internal movements in the survey’s individual subindices during the week.
They all increased, led by a strong rebound in the current finances measure, a gauge that has a reasonable relationship to actual household consumption levels.
“Households’ views towards their current finances registering a gain of 5.2% to 107.0, the highest since February. Views about future finances also improved by 1.4% to 123.9,” said the ANZ.
That optimism was reflected in views towards the economic outlook which also improved modestly.
“Expectations for economic conditions for next year increased by 3.5% on a weekly basis, as did expectations for economic conditions in the next five years which rose by 2.6%,” the bank said.
The final component within the survey — whether now was a good time to buy a major household item — also rebounded, rising 4.3%, leaving it above its historic average.
On that assessment, it appears that the wealth effect from higher house prices is still helping to offset concerns about weak labour market conditions.
However, while a promising sign for household spending, Plank believes that spending growth is likely to remain constrained, as seen in recent retail sales reports.
“Ongoing elevated unemployment and persistent weakness in wage growth, however, will continue to weigh on consumer confidence in our view,” he says.
Looking ahead, and given that view, the release of Australia’s March jobs report on Thursday will likely prove influential on near-term sentiment levels in the weeks ahead.