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Is Australian Consumer Confidence Improving? April Surveys Deliver Mixed Results

The ANZ-Roy Morgan Consumer Confidence index has strengthened for the third week in a row, up 7.7% this week.

The ‘time to buy a major household item’ category increased by 21.5%, but this was still some way below the long-term average.

Australian consumers appear to be becoming more optimistic about the longer-term outlook, with ‘future financial gains’ rising by 6.6% and ‘future economic conditions’ by 6.7%. However, the ‘current finances’ category declined by 2.6%.

“While the recovery has been solid, sentiment is still well below average,” ANZ Head of Australian Economics David Plank said.

Australian are expecting inflation to drop to 3.1%, the lowest level since the survey began measuring inflation expectations in 2010, with the substantial drop in petrol prices likely the major contributor to this.

However, the results of the most recent weekly ANZ-Roy Morgan survey on consumer confidence conflict with some of Australia’s other major banks.

The Westpac-Melbourne Institute Index of Consumer Sentiment plunged 17.7% in April, marking the biggest decline in 47 years. However, it should be noted that this is a monthly survey rather than a weekly one. The ANZ-Roy Morgan Consumer Confidence index also hit a record low in late March.

In Westpac’s survey, the ‘time to buy a major household item’ was the sub-index that recorded the largest drop, falling by 31.6%. This was the lowest reading since the record low of October 2008.

“The plunge likely reflects multiple factors including health concerns around being in shopping environments, ‘social distancing’ restrictions making shopping more difficult, direct pressures on family budgets and a reluctance to make ‘big ticket’ purchases at a time of heightened risks around the economy and job security,” Westpac’s Chief Economist Bill Evans said. “Not surprisingly the sub-index is signalling very difficult times for retailers selling major household goods.”

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