The Roy Morgan Consumer Confidence Rating rose by 1.8 points last week to 110.8 points. The survey is the first to cover the June rate cut and the latest economic growth figures.
What does it all mean?
- Consumer confidence certainly isn’t going gangbusters, but it is on a more positive course. The weekly Roy Morgan consumer confidence rating is the first consumer sentiment indicator to cover the June rate cut, the surprise lift in economic growth and increase in employment for the past month. The weekly Roy Morgan consumer confidence reading has now risen for four out of the last five weeks.
- Encouragingly, four of the five components of the consumer confidence rating rose in the latest week. Consumers are especially confident that their finances will rise in the coming year, a sign that may boost consumer spending.
- Consumers continue to harbour doubts about the European debt crisis and the upcoming carbon tax.
What do the figures show?
The Roy Morgan consumer confidence rating rose by 1.8 points (1.7 per cent) in the week to June 9/10, the fourth gain in five weeks. The consumer confidence rating stands at 110.7, up from recent lows of 108.2 in the week to May 19/20 and is up 2.2 per cent on a year ago.
Four of the five components of the index rose last week:
- The estimate of family finances compared with a year ago rose from -6 to -1
- The estimate of family finances over the next year rose from +10 to +17
- Economic conditions over the next 12 months improved from -13 to -6
- Economic conditions over the next 5 years rose from +11 to +12
- The measure on whether it was a good time to buy a major household item fell from +42 to +32.
What is the importance of the economic data?
The Roy Morgan Consumer Confidence Rating is compiled weekly. The data extends back to 1973. Confident consumers may be more inclined to spend, especially on major items.
What are the implications for interest rates and investors?
- Consumer confidence is OK, but certainly not buoyant. You could hardly claim that Aussie consumers are in the mood to spend.
- When combined with the latest business confidence data it is clear that the Reserve Bank needs to have an easing bias.
- Retailers can’t gain much heart from the latest consumer confidence survey. Rates have been cut twice, economic data has been encouraging but confidence is a touch lower than late April.
CommSec expects the Reserve Bank to cut rates once more in August to support confidence and insulate the domestic economy from the ongoing European issues.