Australian consumer confidence steps up but spending likely to remain below trend
After the rising concerns around the Greek debt crisis and China stock market volatility earlier this month started easing out, consumer confidence rose by 4.5% last week and then again by 0.6% (to 112.5) this week, according to the latest ANZ-Roy Morgan Consumer Confidence Index.
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However, even after this rising trend, the levels still remain subdued and are actually down by 3.2% as compared to the same time last year.
Overall, the consumers’ improving perception of their personal finances both now (2.0%) and in a year’s time (1.1%) has driven the increase. According to Roy Morgan, taking a longer-term perspective, consumers’ views towards their own finances have been relatively stable over the past few quarters, whereas confidence in the economic outlook has seen a downward trend.
ANZ Chief Economist Warren Hogan said: “The fact that confidence has held the previous week’s bounce is a positive sign that confidence could continue to recover in coming weeks in the absence of further market volatility. More broadly, consumers continue to hold a more positive view towards their financial situation, relative to economic conditions. The minutes from the July RBA meeting pointed out that more positive views on personal finances likely reflect low interest rates and high household wealth.”
“However, households’ confidence in their finances is not translating into the same strength in consumer spending as seen in previous cycles. This is likely to be driven by weak wages growth and consumers continuing to pay down debt. As such, consumer spending is likely to remain below trend and a key impediment to a lift in economic growth,” he continued.
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