The ANZ-Roy Morgan consumer confidence index has hit its highest point since February 2017, bringing it in lockstep with NAB’s business confidence survey.
ANZ head of Australian economics David Plank said the rise in consumer confidence, up 2.9 per cent to 118.4 points since last week, is largely attributable to improved employment numbers.
Mr Plank also pointed to the closing gap between business confidence and consumer confidence, citing NAB's June report that showing business confidence is at pre-GFC levels.
While business confidence and consumer sentiment usually move in tandem, this year had been an exception, he said.
“What’s been interesting this year is that there’s quite a large gap between business confidence and consumer sentiment,” Mr Plank told InvestorDaily. “Now that gap has narrowed.”
Mr Plank said the rise in consumer confidence was driven by an array of factors, including employment growth, the corresponding fall in the unemployment rate, the global economic environment, as well as the rise of the Australian dollar.
“The main reason is we’ve had four months of very good employment data, and in particular we’ve had significant growth in full-time jobs,” Mr Plank said.
“Related to that, the unemployment rate’s been falling – those two are consistent.”
More broadly, the positive performance of economies in other countries also has an impact on consumer confidence.
“We’ve seen good economic news out of China recently, Europe is strong, the US is doing fine, despite political issues around Trump,” Mr Plank said.
Another factor of note was the strongly performing Australian dollar in the past week, according to Mr Plank.
“We often see a relationship or correlation in consumer confidence. It may be causal – it may not … It also boosts sentiment,” he said.
“I think consumers probably see a stronger Aussie as a good thing, given that it makes them easier to travel and things like that.”
However, while there were already signs of an uptick in consumer spending, Mr Plank said this rate of growth was unlikely to continue.
“Weak wage growth, which we think will continue this year, ultimately acts as a constraint on the speed of consumer spending,” Mr Plank said.
“But the fact that consumer sentiment is up is good.”
The COVID crisis has revealed how central banks have amplified wealth inequality in recent years, according to Schroders, with its head of A...