David Scutt* says the latest survey of consumer confidence shows Australians are becoming more optimistic about where the economy is heading.
Photo: Dieter de Vroomen
Australian consumer confidence has surged, lifting to the highest level seen so far this year.
The ANZ–Roy Morgan Research weekly confidence index soared 3.6 per cent to 119.5, leaving it at levels not seen since early December last year.
The index now sits well above its long-run average of 113.1, indicating that Australians are feeling a lot more confident about themselves compared to earlier in the year.
A sudden burst of optimism towards the economy drove the improvement, with sentiment towards the next five years jumping 7.7 per cent to 122.0, taking it back to levels not seen since 2013.
Views towards the economy in the year ahead also improved sharply, lifting 2 per cent to 114.4, the highest level since November last year.
Improved sentiment towards the economy also filtered through to views on current and expected family finances in the year ahead, which jumped 3.6 per cent and 5.2 per cent respectively, adding to strong gains seen in recent weeks.
“Strong domestic labour market data and encouraging economic news from China have resulted in a strong gain in consumer confidence,” said David Plank, Head of Australian Economics at ANZ Bank.
“Continuous gains in future financial and economic conditions suggest that Australians are getting comfortable with their future financial wellbeing.”
Despite the impressive gains in views towards the economy and finances, that failed to boost sentiment towards spending, with the index measuring whether now is a good time to buy a household item holding steady at 112.6, continuing to sit near the lowest level since late 2015.
Australians are feeling increasingly confident, but that’s not yet been enough to encourage us to splurge at the shops, at least not yet.
In overall terms, the latest confidence update is undoubtedly welcome news.
However, this series is renowned for being volatile from week to week.
The latest survey was also conducted during the Easter long weekend, a period when many Australians decided to take an extended break given the proximity to the Anzac Day public holiday.
Given the series is not seasonally adjusted, the feel-good effects from an extended break may explain the size of the recent bounce.
The next couple of surveys will be informative as to whether this is truly the start of a sustained rebound in confidence.
* David Scutt is markets and economics editor at Business Insider Australia. He tweets at @Scutty.
This article first appeared at www.businessinsider.com.au.
