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Consumer confidence reaches highest levels since November 2013, after rising by 3.6 per cent in the week ending 21 August according to a report.
According to the ANZ-Roy Morgan Consumer Confidence report, consumer confidence during the last week of the Olympics rose to 121.8 (i.e. net 21 per cent of 1,000 respondents were more positive than negative), up from 117.6 the week before.
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The bank has said that improvement in confidence was broadly-based, with householders viewing the 12-month economic outlook more favourably (5.4 per cent increase), while views of the five-year economic outlook improved by 4.8 per cent. Both indices are now above their long-run averages for the first time since early 2013.
In terms of personal finance, householder confidence also continued on an upward trend, with consumers viewing their current finances more favourably (1.3 per cent increase) as well as their future financial situations (1.4 per cent increase).
The consumers polled also thought that now was a better time to “buy a major household item”, with the report showing a 5.1 per cent increase on last week. ANZ said that this sub-index is “closely correlated with auction clearance rates [particularly in Sydney and Melbourne] and may be capturing some of the renewed momentum in the housing market”.
In all, confidence has been on the rise in recent weeks, with the four-week average coming in at 118.0 — above the monthly average (since 1990) of 112.8.
ANZ senior economist Jo Masters said: “Consumer confidence has increased significantly over the past two weeks and it now sits at the highest level in almost three years.
“The four-week moving average is now 4.6 percentage points above the long-run average and confidence has trended steadily higher since early 2016. The lift in confidence reflects more upbeat views of consumers’ personal financial situations, as well as improving confidence about the economic outlook.”
Ms Masters suggested that one of the “likely factors” behind the lift in confidence last week was the release of the labour market report, which showed a jump in employment and saw the unemployment rate tick down to 5.7 per cent.
She added: “Adding to the positive mix, equity markets remain buoyant and volatility in financial markets is low.
“While good news on the labour and housing markets appear to have boosted confidence recently, the key for the broader economic outlook is whether higher confidence can translate into spending, particularly given high household debt.”
Gary Morgan, executive chairman of Roy Morgan Research, said that the confidence levels have risen because “rising share-markets, and a rising Australian Dollar, combined with the Olympic Games in Brazil have given Australia a boost during a political ‘lull’ [as] Australia’s Parliament is yet to sit since the federal election, which was held nearly two months ago”.
Noting that confidence in the short- and long-term economic conditions were at their highest ratings since November 2013, that the Australia All Ordinaries [index of shares] is “near its highest levels for over a year” and that the Australian Dollar has “increased steadily since hitting a low of 71.8 US cents in late May to now be clearly above 76 US cents”, Mr Morgan said: “The indicators are suggesting Australians believe the worst impacts of the end of the mining boom may now be behind us.”
[Related: Consumer confidence bounces back]
