Young woman shopping with credit card and laptop computer

ANZ-Roy Morgan Australian consumer confidence index weakened slightly over the week, still a solid performance following the large 5.6% jump the previous week and leaving the index comfortably above its long term average. The details were mixed, with two out of the five sub-indices posting positive readings.

Expectations about future financial conditions rose 3.1%, building on the 1.6% gain seen over the week before. The index is now at its highest since January 2017. Views towards current financial conditions, however, fell 4.9% over the week, but remain above the long term average.

However, consumers’ views towards economic conditions deteriorated. The future economic conditions index fell slightly from the previous week while the current economic conditions index fell 3.8% reversing some of the sizeable 8.9% gain posted in the previous week.

Young woman shopping with credit card and laptop computer

The ‘time to buy a household item’ sub-index rose 1.6% last week to 146.3, the highest since January 2016 and well above its long term average.  Four week moving average inflation expectations edged up to 4.6% (previously 4.4%).

ANZ senior economist, Jo Masters, said it was encouraging to see consumer confidence consolidate the large bounce recorded the previous week. “The rise this week largely reflected improved sentiment toward future financial conditions, which may reflect the drop in the unemployment rate, to 5.4%, recorded in the May data last week.

“Views about the economy didn’t fare as well. Geopolitical tensions are likely to have contributed to sentiment about current economic conditions, while views on future economic conditions may also have been weighed down by ongoing concerns over the softening housing market, as well as still low wage growth, high levels of debt and a low savings rate,” she said.

“Given uncertainties about trade protectionism and domestic concerns, we remain cautious about how easily upbeat confidence will be reflected in stronger consumer spending. We continue to see a pick-up in wages as essential for a boost to overall household spending.”