CANBERRA: Confidence is still sitting near multi-year highs as Australians take heart in the domestic economy rather than worrying about Britain’s exit from the European Union.
The ANZ-Roy Morgan consumer confidence index fell 1.7% to a level of 116.8 last week but it remains above the monthly average since 1990 of 112.8. ANZ’s head of Australian economics, Felicity Emmett, says turmoil in financial markets and concerns over the global economic outlook after the UK’s vote to leave the EU pushed confidence only marginally lower. “The strength in confidence reflects the solid momentum in Australia’s economy,” she said.
“The improvement in the labour market is likely to be a key factor behind the recent improvement in confidence, in addition to low interest rates and the ongoing strength in the housing market, which are supporting households healthy assessment of their own finances.”
The survey said the slight drop in confidence in the week was largely driven by a deterioration in consumers’ views about the short-term economic outlook. Respondents were 9% less optimistic about economic conditions in the next 12 months, however they were only 0.9% less positive about conditions over the next five years.
Meanwhile, consumers’ views about their current finances compared with one year ago declined by 2.3%. But they were actually 2.7% more optimistic about their finances over the next 12 months. Emmett warned that, despite most local consumers remaining upbeat, Australia was still vulnerable to the fortunes of the global economy. “Global volatility is the biggest driver of local uncertainty and, with our measure of uncertainty picking up sharply recently, we will be closely monitoring further developments in confidence,” she said.
