The ANZ-Roy Morgan Research (RMR) consumer confidence index rose in the week ended 12 October, up 1.2 points (1.1%) to 113.8, taking it just above its long-run average reading of 113.2 (see next chart).
The overall 1.1% rise in consumer confidence was driven by “perceptions of households’ financial situation compared to a year ago (+3.8%) and expectations over the next year (+3.3%)”.
Following the result, ANZ chief economist, Warren Hogan, continued to summon the confidence fairy and wealth effect from rising housing prices, even though wages are falling in real (inflation-adjusted) terms. In the release, Hogan noted that:
“We expect that the ‘wealth effect’ from higher house prices still has further to run and will allow households to reduce their savings modestly. This will provide some offset to soft household income growth over coming quarters.”
The below chart plots the most recent Westpac-Melbourne Institute Consumer Sentiment index against the ANZ-RM Consumer Confidence index, which shows some divergence recently:
The Westpac-Melbourne Institute Consumer Sentiment index for October is due for release tomorrow, which should add some more colour on the mood of the Australian consumer.
