Consumer sentiment
- Consumer confidence: The ANZ-Roy Morgan consumer confidence rating fell 0.7 per cent from 5-week highs to 117.2 in the past week. The index is comfortably above the average of 114.1 held since 2014, and above the longer term average of 113.0 held since 1990.
- Family finances: The estimate of family finances compared with a year ago stands at 8-month highs.
The consumer confidence figures have implications for retailers, and other consumer-focussed businesses.
What does it all mean?
- In the past six weeks consumer confidence has zig-zagged – rising and falling over the period. But consumers still seem happy with their lot in life. The index of consumer confidence remains solidly above longer-term averages.
- Positive influences on consumer confidence include the strong job market, high dividend payments by listed companies and stabilisation of the political climate. Negatives include a softer Australian dollar, global trade jitters and high petrol prices. But overall, people are looking at their finances and concluding that they are in better shape than a year ago. In fact the measure of family finances compared with a year ago is at 8-month highs. Also the outlook for family finances over the coming year has lifted for the past five weeks.
- For retailers, the good news is that consumers are happy about their finances. The bad news is that people are not convinced that now is a good time to buy a major household item. Home prices are easing in some capital cities while some lenders have lifted mortgage rates slightly.
What do the figures show?
Consumer Sentiment
- The ANZ-Roy Morgan consumer confidence rating fell 0.7 per cent from 5-week highs to 117.2 in the past week. The index is comfortably above the average of 114.1 held since 2014, and above the longer term average of 113.0 held since 1990.
- Three of the five components of the index fell last week:
- The estimate of family finances compared with a year ago was up from +7.8 to +11.6;
- The estimate of family finances over the next year was up from +25.7 to +28.7;
- Economic conditions over the next 12 months was down from +8 to +6;
- Economic conditions over the next 5 years was down from +15.2 to +11.8;
- The measure of whether it was a good time to buy a major household item was down from +33.1 to +27.8.
- The measure of inflation expectations fell from 4.4 per cent to 4.2 per cent.
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?
- CommSec expects stable cash rates until 2019.
- Retailers are operating in interesting times. The job market is strong but petrol prices are rising.