Consumer confidence
- Consumer confidence A net 27 per cent of consumers are positive on their finances over the next year – a result that was last bettered 13 months ago.
- The consumer confidence figures have implications for retailers, and other consumer-focussed businesses.
What does it all mean?
- This time last year, just 5 per cent of consumers thought their finances would be in better shape in 2015. Fast-forward to May 2015 and now 27 per cent of people are positive on the outlook for family budgets.
- The latest federal budget has hit its mark. Confidence has improved, particularly in how consumers are viewing their own financial circumstances. Consumers view their current finances as in the best shape in five months and there hasn’t been a stronger reading on the outlook for family finances in 13 months.
- If people believe their finances are in reasonable shape, clearly they are more likely to spend.
- Political parties just need to ensure that the budget goes through parliament and then get out of the road and allow Aussie consumers and businesses to get on with life.
What do the figures show?
Consumer sentiment:
- ANZ/Roy Morgan consumer confidence rating fell by 1.0 per cent in the week to May 24 to 113.5 after rising by 3.6 per cent in the week to May 17. Confidence is above the average since 2014 of 111.3.
- Two of the five components of the index rose in the latest week:
- The estimate of family finances compared with a year ago was up from +8 to +9;
- The estimate of family finances over the next year was up from +23 to +27;
- Economic conditions over the next 12 months was down from 0 to -5;
- Economic conditions over the next 5 years was steady at +7;
- The measure on whether it was a good time to buy a major household item was down from +35 to +29.
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?
- The economy is repairing. Confidence in family finances has improved, suggesting better times ahead for retailers and service businesses.
- Economy-wide spending is actually OK at present – growing above longer-term averages. The lift in confidence could lead to a lift in spending growth.
- The Reserve Bank is more likely to stay on the interest rate sidelines in coming months.