- The ANZ/Roy Morgan consumer confidence rating rose by 0.5 per cent last week – the first rise in five weeks.
- Three of the five components of the index rose in the latest week.
What does it all mean?
With the Federal Election result confirmed, the “Brexit” hurdle cleared, the sharemarket drifting higher and petrol prices remaining historically low, consumer spirits have lifted. While it was only the first lift in consumer confidence in five weeks, in essence consumers have been more watchful rather than downbeat in recent times. Now that some of the key uncertainties are resolved, it’s clear that Aussie consumers can get on with life.
Consumers were more positive on the outlook for the economy in the latest week while they were also far more upbeat on spending. On the question of whether it was a good time to buy a major household item, the reading lifted 5 points to +38 – a four week high and well above the long-term average of +31.
The lift in consumer sentiment – especially the lift in spending intentions – is clearly good news for consumer-dependent businesses.
What do the figures show?
- The ANZ/Roy Morgan consumer confidence rating rose by 0.5 per cent in the latest week – the first increase in five weeks. The confidence index stands at 115.5, up 2.7 per cent over the year and well above the average of 112.4 since 2014. Three of the five components of the index improved in the latest week:
- The estimate of family finances compared with a year ago was down 2 points from +7 to +5;
- The estimate of family finances over the next year was down from +28 to +26;
- Economic conditions over the next 12 months was up from -1 to 0;
- Economic conditions over the next 5 years was up from +7 to +9;
- The measure of whether it was a good time to buy a major household item was up from +33 points to +38 points.
What is the importance of the economic data?
The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
What are the implications for interest rates and investors?
The level of consumer confidence is above readings that would be considered “normal”. In short consumers are in reasonable spirits. It is also clear that consumers are in a mood to spend according to the latest survey results. Strong competition by retailers and suppliers is working to keep prices low. At the same time, interest rates are at historic lows as are petrol prices with the July average petrol price the lowest for a July month in 11 years. Overall consumer confidence results are positive for retailers.