The ANZ-Roy Morgan Research consumer confidence index increased in the week ended 16 August, rising by 0.7 points to 113.2 to be tracking just above the long-run average of around 113 points (see next chart).
The rise in confidence was driven by a huge lift in perceptions of economic conditions over the next five years (+8.0%), offset by smaller falls in most other categories.
However, ANZ chief economist, Warren Hogan, questions whether the recent improvement in confidence can be maintained in light of weak wages growth and the soft labour market:
“Consumer confidence has crept up slowly in the past few weeks. While concerns around the Greek debt crisis and volatility in the Chinese equity markets worried consumers just a few weeks ago, confidence has remained broadly steady in the face of last week’s Chinese exchange rate devaluation, possibly due to the fact that the Australian dollar ended the week largely unchanged.
Whether this solid performance from confidence can be sustained is the question. Last week’s wages data from the ABS showed record low growth in wages. In an environment of low wages growth combined with a soft labour market, household income growth is likely to remain weak. This, in turn, will continue to provide a constraint on growth in household consumption.”
The below chart plots the most recent Westpac-Melbourne Institute Consumer Sentiment index against the latest ANZ-RM Consumer Confidence index:
Both remain fairly subdued.
