Australian consumer sentiment drops marginally, economy likely performed better in Q4 2016

The ANZ-Roy Morgan Australian consumer confidence remains steady. It dropped marginally by 0.5 percent to 117.5 in the week ended 5 February, partly unwinding the 0.9 percent rise seen in the previous week. A strong rise in the future economic outlook was totally countered by a decline in the current finances and ‘now is a good time to buy a household item’ sub-indices.

Consumers’ views about current and future finances dropped 3.4 percent and 0.2 percent respectively, remaining quite above their long run averages. However, consumers’ review of their current situation is back to the levels seen in mid-2016. Meanwhile, consumers’ views of economic conditions in the coming 12 months rose 0.3 percent following a sharp rise of 5.4 percent seen last week, bringing the index to its highest level in nine weeks.

Consumers’ views of economic conditions in the next five years recorded a strong 4.7 percent increase more than countering last week’s 3 percent fall. The ‘good time to buy a household item’ sub-index dropped 2.8 percent in the week to the lowest level in five weeks. Last week, inflation expectations dropped, although the four week moving average was up 4.6 percent, the highest since December 2015.

ANZ’s head of Australian economics David Plank stated that the rise in households’ views of current and future economic conditions in the past few weeks is pretty encouraging. According to Plank, the rebound is probably related to recent positive data around the trade balance, house prices and business conditions. This is in line with the view that the underlying fundamentals of the economy are in a good shape, implying a better performance in the fourth quarter after the subdued third quarter.

At 04:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was highly bullish at 107.36, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 49.237. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex