Theresa Worrell: Consumer confidence bounces back – rises for the fifth week in a row

The short term future of our economy and our property markets will depend a lot on consumer confidence.

So the rise in consumer confidence reported by Roy Morgan and ANZ is encouraging.

I guess more of us are seeing a light at the end of the tunnel. Australia Economy Concept

ANZ Head of Australian Economics, David Plank, commented:

“The strength in confidence last week was encouraging. Overall sentiment is now around the levels seen during the GFC, while a number of the sub-indices have returned to levels that, while still low, are within the previous historical experience.

We think the gain over the past week is predominantly attributable to the further easing of COVID-19 restrictions and optimism surrounding the daily new cases figure.

There is a long way to go before sentiment gets to levels where people can be said to be optimistic, however.

The weakness in inflation expectations continues and could be a lasting feature of the pandemic.”

Consumer confidence strengthened for the 5th week in a row, gaining 5.3% to 89.5 last week.

All the subcomponents gained except for ‘Time to buy a major household item’, which fell 2.5%.

In other words, the typical Australian household is still stashing their cash rather than splurging on big items.

Consumer Confidence

Current financial conditions

Now 23% (up 4ppts) of Australians say their families are ‘better off’ financially than this time last year and 39% (down 1ppt) say their families are ‘worse off’ financially.
Just 8% (up 2ppts) expect ‘good times’ for the Australian economy over the next 12 months while 48% (unchanged) expect ‘bad times’.

Current financial conditions

Future financial conditions

36% (up 6ppts), expect their family to be ‘better off’ financially this time next year compared to 21% (down 1ppt) that expect to be ‘worse off’ financially.
And in the longer term, 20% (up 5ppts) of Australians are expecting ‘good times’ for the Australian economy over the next five years compared to 18% (down 5ppts) expecting ‘bad times’.

Time to buy a major household item

Now 29% (up 4ppts) of Australians say now is a ‘good time to buy’ major household items, while 45% (up 7ppts) of Australians say now is a ‘bad time to buy’.

Time To Buy Index