Consumer confidence loses momentum

Consumer confidence has strengthened for the fourth week running, though the gain of 1 per cent was much smaller than over the prior three weeks.

Reflecting this loss of momentum, the performance of the sub-indices was mixed. ‘Current finances’ gained 0.4 per cent, while ‘future finances’ fell 3.3 per cent, the first decline after four straight weekly gains.

‘Current economic conditions’ strengthened by 13 per cent for its fourth-straight weekly gain, while ‘future economic conditions’ declined 5.9 per cent.

‘Time to buy a major household item’ also saw its fourth straight weekly gain, up 8.2 per cent, while the four-week moving average for ‘inflation expectations’ fell 0.1 percentage points to its lowest ever level of 3.7 per cent, even though the weekly reading lifted to 3.6 per cent.

“Confidence is showing signs of consolidation after the strong gains of the prior three weeks,” ANZ Head of Australian Economics David Plank said.

“It remains well below average, however, as do all of the subcomponents. We are at an important stage in Australia’s response to the pandemic, with a number of states relaxing some restrictions.”

“If successful, that could set the stage for a further gain in consumer sentiment. Unfortunately, confidence is likely to be challenged by the publication of some very negative economic data over the coming month, after a period in which the data has not caught up with the severity of the economic impact from the lockdowns.”

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