While we’ve been told consumer confidence is in the doldrums thanks to record low wage growth, a new survey suggests the opposite is true with confidence now at multi-year highs.
The ANZ-Roy Morgan Australian Consumer Confidence index has hit 122, a level not seen since November 2013.
Australian consumer confidence has started “2018 on a bright note”, according to a statement from ANZ-Roy Morgan, with the index seeing growth of 4.5 per cent since the last reading on 19 December of 116.5.
Consumers perceived financial conditions, economic prospects and the “time to buy a household item” with more optimism.
The perception of current and future financial conditions rose by 5.8 per cent and 4.2 per cent, respectively, since the last reading, while current and future economic conditions rose by 5.2 per cent and 4.2 per cent.
Sentiments about purchasing household items also increased by 4.4 per cent, the release said, while expectations about inflation were “stable”.
ANZ head of Australian economics David Plank said that the year had started “on a high as the festive mood [carried] on to 2018”.
“Continued strength in the labour market and a strong performance in the Ashes series likely helped sustain the cheer among consumers,” he said.
However, Mr Plank moderated that optimism somewhat by pointing out that consumer confidence tended to be higher in the first reading of January.
“Still, the increase this year is stronger than the 3.6 per cent average lift in confidence for the past nine ‘annual turns’, indicating that the gain in confidence is more than just seasonal,” he said.
“Confidence has been trending higher since the low for 2017 in late August.”
Mr Plank added that it was “encouraging” that consumers appeared more willing to overlook “high debt burden, moderating house price gains and the impact of higher petrol prices”, with strong employment growth pinpointed as a key driver.
“We’ll find out in February (with the next wages data) whether a pick-up in wage growth has also contributed to the gain in sentiment,” he said.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.