Confidence lifts on record current finances

ANZ-Roy Morgan Australian Consumer Confidence gained 1.2% last week, pushing the index above its long-term average.

Current finances rose by a strong 5.9%, taking this measure of sentiment to its highest level since the weekly survey began in 2008. In contrast, future financial conditions fell 3%, reversing the gains of the past two weeks but remaining above average.

Economic conditions were also mixed. Current economic conditions fell 1.4%, the fourth consecutive decline, while future economic conditions had a marginal gain of 0.2%. Both the indices are below average.

The ‘Time to buy a major household item’ sub-index gained 4%, after falling for three consecutive weeks. The four-week moving average for inflation expectations was stable at 3.9%. The weekly reading for inflation expectations jumped to 4.1%.

ANZ Head of Australian Economics, David Plank, commented:

“This week’s gain in consumer confidence is pleasing, considering the news flow around the US-China trade war and the resulting equity weakness. Lower interest rates and taxes are undoubtedly helping. Sentiment toward current finances has gained for three consecutive weeks and has risen to its highest level since weekly surveys began in 2008. This has been sufficient to push overall confidence back above its long-run average. We think the divergence between financial and economic sentiment can be sustained, so long as the labour market remains solid. Also of note is the lift in inflation expectations for the week, to back above 4%.”