Gains for consumer confidence again

| August 23, 2022

By Poppy Johnston in Canberra

Consumer confidence grew for the second week in a row despite weak wages growth and expectations of more interest rate hikes.

Up by 1.7 per cent, confidence is now at its highest level since June based on the latest ANZ-Roy Morgan survey.

This follows a 4.9 per cent jump in consumer sentiment the week before.

However, consumer sentiment is still “exceptionally low” compared to historical averages.

ANZ head of economics David Plank said the fall in the unemployment rate may have fed into the uptick in sentiment, although the drop in wages in real terms likely dampened results.

“Consistent with this, confidence is still exceptionally low but consumers are modestly optimistic about their future financial situation despite the prospect of further increases in interest rates,” Mr Plank said.

Four of the five subindices increased, with ‘future financial conditions’ rising by 1.4 per cent.

‘Current financial conditions’ fell by three per cent.

‘Weekly inflation expectations’ dropped 0.3 to 5.5 per cent, while its four-week moving average dropped 0.1 to 5.6 per cent.

‘Current economic conditions’ jumped by 8.4 per cent – reaching its highest level since the end of May.

The ‘time to buy a major household item’ metric also ticked upwards for the first time in three weeks, increasing by 2.4 per cent.

Confidence improved in NSW, Victoria, Queensland and South Australia but fell in Western Australia.

However, confidence was already highest in WA.

The Reserve Bank of Australia pointed to household spending as a source of “uncertainty” ahead of its September decision, noting that consumer confidence was generally falling but household incomes were also benefiting from the tight labour market. 

AAP