Key takeaways
Consumer confidence rose 2.1% last week, reaching its highest level since last May, as improved sentiment around Australia's economic conditions drove the increase.
However, confidence dropped in Victoria and SA.
The sharp drop in inflation expectations to a seven-month low of 5.0%, despite higher petrol prices, likely supported confidence.
Over one-in-six Australians expect 'good times' for the economy over the next five years, up from 16% expecting 'bad times'.
I keep careful track of consumer confidence because it's a good indicator of what's ahead for our economy and property markets.
And currently, consumer confidence is up by 1.8pts to 87.8 - the highest in nearly four months since late May this year.
This increase has mainly been driven by improving sentiment in regard to the performance of the Australian economy over the next year and five years.
Confidence in economic conditions improved, while financial conditions softened
As measured by ANZ-Roy Morgan, consumer confidence increased by 2.1% last week, reaching its highest level since last May.
In fact, confidence rose for a second straight week in NSW, Queensland, and WA.
On the other hand, it dropped in Victoria and SA.
Ms Catherine Birch, Senior Economist for ANZ commented:
"Consumer confidence rose 2.1% last week, hitting a four-month high of 87.8.
While confidence was still well below the neutral level of 100, at least two of the five confidence subindices exceeded 100 for the first time since early March.
- Also read:The Mirage of Overnight Property Millionaires: Distinguishing the Skilled from the Lucky
- Also read:Latest property price forecasts for 2025 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:This week’s Australian Property Market Update – Latest Data, State by State November 26th 2024
- Also read:Melbourne property market forecast for 2025
- Also read:Sydney property market forecast for 2025
The increase in headline confidence was mainly driven by improved sentiment around Australia’s economic conditions.
Continued strength despite 225bp of rate hikes over the past five months may be quelling fears of a sharp downturn.
ANZ-observed spending data show household spending was solid in the first half of September, including on discretionary goods and services.
The sharp drop in inflation expectations to a seven-month low of 5.0%, despite higher petrol prices, also likely supported confidence."
Here's what the latest survey of consumer confidence found:
Current financial conditions
- Now 24% of Australians (up 1ppt) say their families are ‘better off’ financially than this time last year compared to an unchanged 42% that say their families are ‘worse off’ financially.
Future financial conditions
- Looking forward, now fewer than a third of Australians, 32% (down 2ppts), expect their family to be ‘better off’ financially this time next year while 31% (up 2ppts), expect to be ‘worse off’.
Current economic conditions
Future economic conditions
- There has been a marked improvement in terms of sentiment regarding the Australian economy in the long term with over one-in-six, 17% (up 5ppts) of Australians expecting ‘good times’ for the economy over the next five years (the highest figure for this indicator for over five months since mid-April) compared to 16% (down 1ppt) expecting ‘bad times’ (the lowest figure for this indicator for over seven months since mid-February).
Time to buy a major household item
- When it comes to buying intentions now 24% (up 1ppt) of Australians, say now is a ‘good time to buy’ major household items while almost twice as many, 45% (down 1ppt), say now is a ‘bad time to buy’.
