Consumer confidence in Australia hit the highest level in almost two months last week, as jobs growth helps underpin improved sentiment towards the economy.
Aussie households were also likely to have gotten a boost from gains in the share market, which saw the ASX200 close above 6,000 for the first time in nearly 10 years.
And ANZ’s head of Australian Economics, David Plank, cited another factor which may have boosted sentiment — the Melbourne Cup, which Victoria celebrates with a public holiday.
“Consumers appear to be more upbeat after the Melbourne Cup carnival last week,” Plank said.
Indeed, confidence has now risen in the week following the Cup in each of the past three years.
The end result was that the ANZ-Roy Morgan consumer confidence index had a solid 2% rise to a reading of 114.8, above its four-week average of 113.5.
Data for the survey is collected on the weekend, and is based on around 1,000 face-to–face interviews.
The gains were driven by a sharp boost in views towards the broader economy. Views towards economic conditions over the next 12 months rose by 3.5%, while the reading for the five-year outlook had a 7% gain.
Despite the increase, sentiment towards the longer-term economic outlook remains stuck well below its long-term average. Views towards current economic conditions have returned to trend levels.
“Overall economic conditions have broadly trended up since the recent low in mid-September, with sentiment towards current economic conditions recovering to its long term average. This likely reflects ongoing labour market strength,” Plank said.
In the area of household finances — a key area of concern given the combination of high house prices in a cooling market and low wage growth — the picture was somewhat more pessimistic.
View towards current financial conditions fell by 0.9%, but the four-week moving average remains above long-term trend levels.
Sentiments towards future economic conditions held steady, but recent falls have seen that index dip below its long-term average.
Looking at the recent trend across both the broader economy and household finances, the numbers suggest Aussie consumers are managing reasonably well but remain concerned about the future.
But for now, Plank expects solid results in two key data releases this week — wage growth in Wednesday and employment figures on Thursday — to help bolster consumer confidence in the near term.
“We expect an uptick in Q3 wages due to the larger-than-usual minimum wage hike and a positive number on the employment front, suggesting that confidence should receive some support even as political uncertainty rises,” Plank said.