Jobs growth has buoyed confidence but Australian households remain under pressure

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Australian consumer confidence rebounded slightly last week, led by another small lift in household finances.

The weekly consumer report card by ANZ and Roy Morgan showed that confidence edged up to 0.4% to 113.8, above the long-term average of 112.9.

It’s a continuation of the theme evident in last week’s measure, with household’s feeling better about their finances but not about the state of the broader economy.

The survey’s four-week moving average rose to 114 from 113 last week, but despite a broad pickup since August it remains below the levels seen earlier this year:

Data for the survey is collected on the weekend, and based on around 1,000 face-to–face interviews.

“Consumers’ views towards current as well as future financial conditions improved, with the indices increasing by 0.7% and 0.3% respectively,” said Felicity Emmett, senior economist at ANZ.

While jobs growth has helped to boost confidence levels in recent months, the Australian consumer remains under pressure — as evidenced by last Thursday’s very weak retail sales report.

“While the extent of the weakness was a surprise, it occurred alongside a soft spot for confidence in the month, which we expect was in response to higher electricity prices, higher petrol prices and slowing house price growth,” Emmett said.

Emmett said the economy is well-placed to continue the recent run of jobs growth, and that’s likely to provide baseline support for consumer’s views towards their financial conditions.

“The labour market should continue to improve, with the outlook supported by the better investment outlook, both on the private side and the public infrastructure side, as well as elevated business conditions.”

However, with Australian households facing a looming electricity bill shock stemming from the July 1 price changes, Emmett repeated ANZ’s assertion that wage growth remains the key to a meaningful pickup in confidence.

“We continue to see confidence being weighed down by the combination of high household debt and low wage growth. Ongoing improvement in the labour market and a corresponding increase in wage growth remain the keys to a material uptrend in confidence.”

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