The ANZ-Roy Morgan consumer confidence index registered its first rise in five weeks in the week ended 19 April 2016, bouncing by 3.8 points to 115.8, and is now tracking above the long-run average of 112.7 (see next chart).
Sentiment towards the domestic economy drove the bounce, with view towards the economy in the next 12 months jumping by 7.5% and views towards the economy in the next five years rising by 5.2%. Views towards consumers’ current financial situation also rose by 3.9%, as did whether now was the time to buy a major household item (up 3.7%). However, these were partly offset by a 1.9% fall in consumers’ sentiment towards future finances.
Commenting on the result, head of Australian economics at the ANZ, Felicity Emmett, questioned whether this latest bounce would translate into higher consumer spending:
“Consumer confidence bounced last week after declining four weeks in a row, with this turnaround taking sentiment back above its long run average,” says Emmett.
“Last week’s strong labour market report showing a fall in the unemployment rate to 5.7% is likely to have been a key factor in the rebound. The jobless rate is now at the lowest level in over two years, and we anticipate conditions will remain solid in the near term.
“The strength in business conditions, which are now back at their highest levels since the GFC, point to a solid labour market in the near term.
“While good news on the labour market and business conditions appear to have boosted confidence recently, the key is how confidences translates into spending. Household spending remains a key risk to the outlook, and as such confidence will be key to watch in the lead up to the Commonwealth Budget and what looks likely to be a July 2 double dissolution election.”
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 optimism:
