Consumer confidence: recover more than half last week's loss

ANZ-Roy Morgan Australian Consumer Confidence bounced 2.1% last week, following a sharp 3.5% decline in the prior week. The details were positive, with all but one subindex posting gains.

Households’ perception of current financial conditions improved 1.2% last week, largely recovering from the 1.3% fall in the previous week. Sentiment towards future financial conditions bounced a solid 3.1%, partially reversing the 7.6% tumble in the week prior 

Consumers’ were also more optimistic about current economic conditions – their assessment improved 2.9% last week, ending its streak of weekly declines. Of particular note, views towards future economic conditions jumped 6.1%- more than reversing the previous week’s 5.3% decline and bringing the subindex to its highest value in six weeks.

Going against the tide, the ‘time to buy a household item’ subindex slipped 2.2% to 126.5 (vs 134.0 long term average). Four-week moving average inflation expectations were unchanged at 4.3%.

ANZ Head of Australian Economics, David Plank, commented:

“It is very encouraging to see confidence recover quite strongly after a sharp slide in the previous week. We were concerned that the political turmoil in Canberra might deal another blow to consumer sentiment, but it appears the resolution of the leadership crisis has provided some relief – even if it hasn’t provided the Coalition with a boost in the political polls.

The strong recovery in future economic conditions suggests that households may view the result as providing policy continuity. It is not all good news, however. Despite the tick up in headline confidence, households remain pessimistic about purchasing large household items.

This subindex has fallen sharply from its recent high in June, and now sits well below its long term average. Sluggish wage growth, high levels of debt and decreasing house prices are likely constraining sentiment in this regard.”

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