(Australian Associated Press)
Consumer confidence has picked up in the past week, recovering some ground after the previous week’s losses, as attitudes towards current and future financial conditions improves.
The ANZ-Roy Morgan Consumer Confidence Index rose 0.4 per cent to 113.8 in the week to October 8, near the long run trend.
Views toward current and future financial conditions rose by 0.7 per cent and 0.3 per cent respectively, while the ‘time to buy a major household item’ index also rebounded – by 1.8 per cent.
Consumer confidence has been strengthening since August, supported by strong jobs growth, ANZ senior economist Felicity Emmett said.
“The labour market should continue to improve, with the outlook supported by the better investment outlook, both on the private side and the public infrastructure side, as well as elevated business conditions,” Ms Emmett said.
However, households’ views on economic conditions – both in the short term and over the longer term – declined slightly.
Inflation expectations were nearly unchanged at 4.5 per cent on a four-week moving average basis.
Consumers are clearly under pressure, as shown in very weak retail sales for August, Ms Emmett said .
“While the extent of the weakness was a surprise, it occurred alongside a soft spot for confidence in the month, which we expect was in response to higher electricity prices, higher petrol prices and slowing house price growth,” she said.
Retail spending fell 0.6 per cent in August – its sharpest fall in more than four years.
“We continue to see confidence being weighed down by the combination of high household debt and low wage growth,” Ms Emmett said.
Ongoing improvement in the labour market and a corresponding increase in wage growth will remain key to a material lift in confidence, she said.