Australia’s consumer sentiment rebounds on strong rise in economic outlook sub-indices

Australia’s consumer sentiment rebounded sharply in the week ended 7 November, totally countering the drop in the earlier two weeks. The improvement in the sentiment was supported by a solid increase in the sub indices of the economic outlook.

The ANZ-Roy Morgan Australian consumer confidence rose 3.2 percent. Consumers’ view regarding economic conditions for the next 12 months surged 7.8 percent, whereas their views towards economic conditions for the next five years increased 5.2 percent.

Consumer sentiment for their finances also increased in the week ended 7 November, rising solidly by 3 percent. This more than countered the drop seen in the previous three weeks. In the mean time, the views of households regarding their current finances rose 1.7 percent. On the other hand, consumers’ views on whether ‘now is a good time to buy a household item’ remained greatly unchanged, rising just 0.4 percent last week, noted ANZ.

The four week moving average of inflation expectations dropped slightly by 0.2 percentage points to 3.9 percent. ANZ head of Australian Economics Felicity Emmett stated that the consumer sentiment in Australia jumped despite the current uncertainty surrounding the U.S. presidential election and the global equity markets’ weak performance last week.

“Although we would caution against over-interpreting this pickup as weekly data have been particularly volatile of late, it appears that concerns over the global outlook have been largely offset by the ongoing solid performance of the domestic economy”, added Emmet.

However, the fall in inflation expectations, which probably shows the weakness in the third quarter CPI report released recently, is slightly worrisome, noted Emmet.