The ANZ-Roy Morgan consumer confidence index rose by 1.2 points to 115.1 in the week ended 15 May 2016, and continues to track above the long-run average of 112.7 (see next chart).
The overall rise in consumer confidence was underpinned by improved sentiments towards the economic outlook, with the sub-indices gauging perceptions one and five years ahead rising by 6.1% and 3.3% respectively.
According to the head of Australian economics at the ANZ, Felicity Emmett, the rise in confidence was most likely driven by a delayed reaction to the recent cut in the cash rate to 1.75%:
“Consumer confidence rose last week in what we expect was a drawn-out reaction to the previous week’s interest rate cut from the RBA. Stronger equity markets were also likely helpful in lifting confidence”.
While the election campaign had little impact on confidence last week, Emmett sees it playing a role over the coming weeks:
“With news on the election battle quite mixed over the past week, we expect that there was little impact on sentiment. With such a long election campaign, however, it will be interesting to see how quickly voter fatigue sets in.”
“With the economic outlook still quite uncertain, we expect that confidence will remain sensitive to developments in the domestic economic data, as well as the evolution of the political debate in the lead-up to the July election.”
The below chart, which plots the most recent Westpac-Melbourne Institute Consumer Sentiment index against the latest ANZ-RM Consumer Confidence index, shows both indices displaying slight optimism:
