Consumer spirits merely deflated by weaker $A

Consumer confidence

• Consumer confidence: The weekly ANZ/Roy Morgan consumer confidence rating fell by 0.8 per cent to 113.2 in the week to January 17. Confidence is down 0.4 per cent over the year but up 0.4 per cent on the average since 1990.

What does it all mean?

• Aussie consumers don’t like a weaker Aussie dollar. It means overseas trips and imported goods are potentially more costly. Consumers also don’t like volatile sharemarkets. It creates uncertainty. But consumers believe that their finances are better than a year ago and this is a good leading indicator of spending. Data showing unemployment at 26-month lows certainly helps to support confidence.

What do the figures show?

• The weekly ANZ/Roy Morgan consumer confidence rating fell by 0.9 points (0.8 per cent) to 113.2 in the week to January 17. Confidence is down 0.4 per cent over the year but above the average of 111.4 since 2014.
•  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 +2 to +11;
  • The estimate of family finances over the next year was up from +22 to +28;
  • Economic conditions over the next 12 months was down from -2 to -9;
  • Economic conditions over the next 5 years was down +10 to +5;
  • The measure of whether it was a good time to buy a major household item was down from +38 points to +32 points.

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 are taking things in their stride. While Aussies are more cautious on the economy, they believe that their finances are better than a year ago and likely to improve – results that are good news for retailers.