31/10/2014
Outlook for family finances at 6½ - month highs
Consumer confidence lifts:
The weekly ANZ/Roy Morgan consumer confidence rating rose by a healthy 2.7 per cent in the week to October 26.
Aussie households’ views about economic conditions over the next 12-month lifted to a 6-month high while views on their finance held at 6½-month highs.
What do the figures show?
Consumer sentiment:
The ANZ/Roy Morgan consumer confidence rating rose by 2.7 per cent to 114.6 in the week to October 26 after falling by 1.9per cent in the previous week. The confidence rating is down just 1.4 per cent on the 7-month highs recorded for the week to July 27.
Three of the five components of the index rose in the latest week, with the other two components stable:
The estimate of family finances compared with a year ago was up from +4 to +6;
The estimate of family finances over the next year was unchanged at +25 – 6½-month highs;
Economic conditions over the next 12 months was up from -5 to +4 – 6-month highs;
Economic conditions over the next 5 years was up from +3 to +7;
The measure on whether it was a good time to buy a major household item was unchanged at +31.
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.
Consumer confidence remains healthy and the latest lift is no doubt being supported by the recent lift in share markets, rise in house prices and cheaper fuel prices – all factors that will support household budgets. In fact in the latest survey Aussie households’ views about economic conditions over the next 12-month lifted to a 6-month high while views on their finances held at 6½-month highs. No doubt the warm weather is also ensuring consumers remain chipper and bodes well for retailers in the lead up to Christmas.
At present the Reserve Bank is in a delicate balancing act of keeping interest rates low to support the broader economic recovery while hoping house price growth is more sedate over the medium term.CommSec expects no change to monetary policy until the second half of next year with a rate hike pencilled in August 2015.
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?
Consumer confidence remains healthy and the latest lift is no doubt being supported by the recent lift in share markets, rise in house prices and cheaper fuel prices – all factors that will support household budgets. In fact in the latest survey Aussie households’ views about economic conditions over the next 12-month lifted to a 6-month high while views on their finances held at 6½-month highs. No doubt the warm weather is also ensuring consumers remain chipper and bodes well for retailers in the lead up to Christmas.
At present the Reserve Bank is in a delicate balancing act of keeping interest rates low to support the broader economic recovery while hoping house price growth is more sedate over the medium term.CommSec expects no change to monetary policy until the second half of next year with a rate hike pencilled in August 2015.
Source: Craig James – Chief Economist - CommSec
