Consumers wary, but still spending
The weekly ANZ/Roy Morgan consumer confidence rating eased 2.2 per cent from 111.7 to a near 12-month low of 109.2 in the week to August 20. Confidence is down 10.3 per cent over the year and below the average of 113.2 since 2014.
Four of the five components of the index fell in the latest week:
The estimate of family finances compared with a year ago was down from +5 to +3;
The estimate of family finances over the next year was down from +23 to +16;
Economic conditions over the next 12 months was down from -5 to -6;
Economic conditions over the next 5 years was down from +5 to -2;
The measure of whether it was a good time to buy a major household item was up from +30 to +35.
What is the importance of the economic data?
The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
What are the implications for interest rates and investors?
Consumers say that they aren’t overly confident at present. But they are still spending. Whilever wage growth is exceeding price growth then consumers will spend.
Retailers need to watch measures of consumer sentiment but not unduly worry about survey results.
Craig James is the chief economist at CommSec.
