Consumer confidence rebounds

Advertisement

By Leith van Onselen

The ANZ-Roy Morgan consumer confidence index rebounded in the week ended 1 May 2016, rising by 2.2 points to 113.9 to be tracking slightly above the long-run average of 112.7 (see next chart).

ScreenHunter_12762 May. 03 09.45

Four of the survey’s five components rose during the week. Sentiment towards the economy looking one and five years ahead improved by 4.3% and 2.9% respectively, whereas perceptions towards consumers’ current financial circumstances also improved by 2.9%. The subindex tracking whether it was a good time to buy a major household item also rose by 1.5%. However, sentiment about personal finances in the year ahead did fall by 0.9%.

Commenting on the result, head of Australian economics at the ANZ, Felicity Emmett, put the rebound in confidence down to a possible rate cut later today, along with leaks that households won’t be negatively affected in tonight’s Budget:

Advertisement

“With leaks around the Budget suggesting no major hits to households, we expect that last week’s rally represents an element of relief. It’s possible also, that the recent speculation around the potential for RBA rate cuts may have supported consumer sentiment over the past week”…

“Tonight’s Budget will be important in shaping confidence over the next few weeks in the lead-up to a double dissolution election in early July. Given the weak tone to retail sales over the past few months, some boost to confidence would be welcome, especially if it translated into stronger consumer spending”…

The below chart, which plots the most recent Westpac-Melbourne Institute Consumer Sentiment index against the latest ANZ-RM Consumer Confidence index, shows a wide divergence, with Westpac’s displaying pessimism and ANZ’s displaying slight optimism:

ScreenHunter_12763 May. 03 09.47
Advertisement

[email protected]

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.