Call us on 1300 794 893

The Experts

Consumer confidence lifts

Craig James
Wednesday, August 27, 2014

Bookmark and Share

Weekly consumer confidence

Consumer confidence lifts: the weekly ANZ/Roy Morgan consumer confidence rating rose by 0.9 per cent in the week to 24 August.

Consumer views about their finances compared with a year ago improved by 11 per cent to the best levels in nine months.

The consumer confidence figures have implications for retailers, and other consumer-focussed businesses.

What does it all mean?

Aussie consumers have certainly become a lot more resilient to external shocks choosing to focus on a more upbeat view of household finances and the broader economic recovery. Over the last couple of months Aussie consumers shrugged off the initial blues about the Federal Budget, while in the last fortnight, the jump in the jobless rate to a 12-year high has been put on the backburner. Confidence levels are only down 2.3 per cent on the 7-month highs recorded for the week to July 2.

No doubt the ongoing strength in share markets and lift in house prices would be supporting demand. In addition the slide in fuel prices would be ensuring a few additional saving at the pump. The good news for retailers is that consumer views about their finances compared with a year ago have improved to the best levels in nine months.

The underlying strength in four of the five key components of the confidence index suggests that Aussies are once again optimistic – not only about their own finances but also whether now is a good time to buy a major household item. Clearly the rebound in confidence is great news for retailers but would also be a welcome relief to policymakers. It should translate through to a pickup in retail activity in coming months

The Reserve Bank continues to preach stability in interest rates. There is nothing in the latest data to suggest rates will change anytime soon.

What do the figures show?

Consumer sentiment:

The ANZ/Roy Morgan consumer confidence rating rose by 0.9 per cent to 113.5 in the week to August 24 after rising by 0.9 per cent in the previous week. The confidence rating is only down 2.3 per cent on the 7-month highs recorded for the week to July 27.

Two of the five components of the index rose in the latest week:

  • The estimate of family finances compared with a year ago was up from -1 to +10 – a nine-month high
  • The estimate of family finances over the next year was down from +23 to +19
  • Economic conditions over the next 12 months was up from -3 to -1
  • Economic conditions over the next 5 years was steady at +10
  • The measure on whether it was a good time to buy a major household item was down from +33 to +30.

What is the importance of the economic data?

The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the reserve Bank.

What are the implications for interest rates and investors?

Over 2014, the consumer confidence index has averaged 110.5. Currently it sits at 113.5. The index also sits 14.3 per cent above the lows set in late May and sits 2.3 per cent below recent 7-month highs. Confidence is healthy at present. The Reserve Bank remains comfortable with rate settings.

Published: Wednesday, August 27, 2014


New on Switzer

blog comments powered by Disqus
Pixel_admin_thumb_300x300 Pixel_admin_thumb_300x300