Consumer confidence up a notch

Consumer confidence gained 0.3 per cent last week, according to the ANZ-Roy Morgan Australian Consumer Confidence Index, its second straight weekly gain.

Financial conditions were mixed, with current finances down 3.3 per cent after a strong rise in the prior week and future financial conditions gaining 1.3 per cent. Both measures of financial conditions are above average.

Economic conditions were also mixed. Current economic conditions fell 2.7 per cent, the fifth consecutive decline, while future economic conditions rose 3.8 per cent. Both the sub-indices are below average.

The ‘time to buy a major household item’ sub-index gained 1.7 per cent. This follows a rise of 4 per cent in the previous week. The four-week moving average for inflation expectations rose by 0.1 percentage point to 4 per cent.

“Confidence rose marginally last week despite some not-so-positive economic data,” ANZ Head of Australian Economics, David Plank said. “Reports on business investment and construction work done pointed to a very soft second-quarter GDP report, 0.2 per cent by our reckoning.”

“Consumer views toward their own finances were down somewhat but this drop follows the very strong gain in the prior week and still leaves sentiment about personal finances well above average.”

“Consumers remain apprehensive about the economic outlook over the coming year. In our view, how the divergence between these two measures is closed will be a key determinant of consumer spending in the year ahead.”

“A good piece of news for the Reserve Bank of Australia is the rise in inflation expectations after the four-week moving average dipped below 4 per cent for a couple of weeks.”

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