I keep track of consumer confidence because it’s a good barometer of what and for the property markets.
This week consumers’ views towards their personal financial situation in the next 12 months rose by a sharp 5.4% to the highest level seen since October 2009.
Overall ANZ-Roy Morgan Australian Consumer Confidence rose 1.4% to 116.4 this week, building on the 3.1% bounce in the previous week.
Confidence levels are now back to the highs seen in December with the negative impact from financial market volatility in January now fully reversed.
A strong Australian dollar, gains in equity markets, and falling petrol prices are likely to have supported the upturn in confidence recently.
The increase in confidence this week was driven by households’ views of their own finances.
Consumers’ views towards their personal financial situation in the next 12 months rose by a sharp 5.4% to the highest level seen since October 2009.
The subindex on ‘finances compared to a year ago’ also rose 3.8%, and remains on a gradual upward trend.
By contrast, consumers’ views towards the economic outlook fell this week, partially retracing the large increases in the previous week.
The subindex on ‘economic conditions in the next 12 months’ declined 0.4% and ‘economic conditions in the next 5 years’ fell 3.1%.
These indices remain well below their long run averages.
ANZ Head of Australian Economics Felicity Emmett commented:
“ANZ-Roy Morgan Consumer Confidence has retraced the falls associated with financial market volatility in January and is now sitting at above-average levels. This week’s reading is the second highest seen since January 2014, reflecting a more upbeat view of consumers’ personal financial situation, as well as improving confidence about the economic outlook.
“There is a mix of factors that may be playing a part in lifting confidence recently: the stronger Australian dollar is seen as a good thing for households wanting to travel overseas, equity markets have retraced most of their earlier losses, and petrol prices have been falling sharply since the beginning of the year.
“Solid labour market conditions are also likely to have played a key role in lifting confidence. This week’s labour market report will be important in assessing whether the recent strength has persisted. Further inroads into the unemployment rate will be crucial for confidence and spending.”