The ANZ-Roy Morgan Research consumer confidence index was unchanged in the week ended 31 May, remaining at 113.5 – marginally above the long-run average of 113.2 (see next chart).
According to chief economist, Warren Hogan, confidence is being upheld by positive reactions to the federal budget as well as continued house price gains, which has offset otherwise poor household fundamentals:
“While it is a positive sign that consumer confidence has largely maintained the post budget bounce, the question is whether further momentum can build in coming weeks or whether the bounce will be retraced. Solid growth in house prices continues to be supportive for confidence but household fundamentals outside of housing remain weak amid low wages growth, a soft labour market, and high household debt.
How consumers reconcile the conflicting forces of strong house price gains and weak income growth will likely be a key determinant of confidence going forward.
The below chart plots the most recent Westpac-Melbourne Institute Consumer Sentiment index against the latest ANZ-RM Consumer Confidence index, which both show the post-Budget bounce:
