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Tuesday 11

December, 2018 3:38 PM



No signs of flagging in consumer confidence

No signs of flagging in consumer confidence

The ANZ-Roy Morgan consumer confidence rating rose by 0.7 per cent to 118.6 in the past week.

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27.11.2018 04:39 PM

No signs of flagging in consumer confidence
Consumer sentiment

Consumer sentiment: The ANZ-Roy Morgan consumer confidence rating rose by 0.7 per cent to 118.6 in the past week. The index is well above the average of 114.2 held since 2014, and above the longer-term average of 113.0 held since 1990. The consumer confidence figures have implications for retailers, and other consumer-focussed businesses.

What does it all mean?

Aussie consumers are resilient. Despite sharemarket gyrations and the inconvenient interruptions provided byglobal and domestic politics, confidence levels of Aussie consumers are above “normal”. The strong job market and falling petrol prices and clearpositives for consumers together with the ongoing deals provided by global and domestic retailers.

Aussie consumers also tend to like a firmer Aussie dollar as it is considered favourable for maintaining spending power when shopping or travelling overseas. So an Aussie near US72-73 cents, rather than US70-71 cents a few weeks ago, serves to support confidence levels.

Retailers will be pleased by the trading environment. The job market is strong, wages are ticking higher and petrol prices are well down from recent highs.

What do the figures show?
Consumer Sentiment

The ANZ-Roy Morgan consumer confidence rating rose by 0.7 per cent to 118.6 in the past week. The index is well above the average of 114.2 held since 2014, and above the longer-term average of 113.0 held since 1990.

Three of the five components of the index decreased last week:

• The estimate of family finances compared with a year ago was down from +6.7 to +6.2;

• The estimate of family finances over the next year was down from +25.2 to +21.4; 

• Economic conditions over the next 12 months was up from +9.9 to 15.4;

• Economic conditions over the next 5 years was down from +16.6 to +15.7;

• The measure of whether it was a good time to buy a major household item was up from +30.7 to +34.1.

The measure of inflation expectations fell from 4.2 per cent to 4.1 per cent.

What is the importance of the economic data?

The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.

What are the implications for interest rates and investors?

Consumers remain positive but they aren’t getting carried away. One of the key areas to watch is the collective attitude of consumers on their future finances. There has been a softening in views in recent weeks, suggesting some conservatism on current and future spending.

Published by Craig James, Chief Economist, CommSec
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