Westpac’s consumer confidence for June number is out and shows a solid recovery of the past two months of heavy losses:
The Westpac Melbourne Institute Index of Consumer Sentiment rose 4.7% in June from 97.6 in May to 102.2 in June.
Westpac puts it down to:
After falling sharply through April and May, consumer sentiment recovered some lost ground in June. The 4.7% rise takes the level of the index back over the 100 level indicating that optimists now outnumber pessimists again although the margin is slim. Consumer confidence remains 8.2% lower than its peak early in the year. It appears that some of the factors behind the sharp drop in sentiment in May were temporary. In particular, concerns stemming from the Federal Budget may have eased somewhat in June. However, a deterioration in consumer sentiment around prospects for the Australian economy, which has been a key underlying theme over the last three months, remains apparent. These fears would have been underscored by the weak Q1 national accounts data, a sharp sell-off in the sharemarket (down 7% between the May and June surveys) and a slide in the Australian dollar (down 4¢ vs the US dollar between the two surveys).
And there is this:
There are also signs that households may be becoming less risk averse with a notable shift in their views on the ‘wisest place for savings’. In March, 41.3% of respondents favoured bank deposits or other fixed interest investments with a further 18% nominating ‘pay down debt’. Those proportions declined to 40.7% and 15.7% in June. Indeed the proportion nominating ‘pay down debt’ was the lowest recorded since December 2007, a sign that households may be starting to ease up on their debt-reduction efforts. The main swing has been towards a more favourable view on real estate with 24.6% nominating this as the ‘wisest place for savings’ (up from 21.3% in March). The proportion nominating shares was relatively steady at 8.4%, a low level by historical standards but up from 5.3% in June last year.
I maintain that folks will not borrow like they used but it is good that confidence remains robust enough to sustain a slow melt in asset prices.
For comparison, here is Roy Morgan’s weekly index as of yesterday: