Consumer confidence recovers post-rate hike drop

“There was a notable recovery in consumer confidence over the past week, with the loss in the week of the RBA’s August rate hike more than completely reversed,” ANZ head of Australian economics, David Plank, said.

“Across the major states, confidence was up very strongly in Western Australia and made solid gains in NSW and Victoria. Confidence declined in Queensland and South Australia, however. It was notable that sentiment about ‘future financial conditions’ is now in positive territory, if only just, for the first time since late May.

“In our view this speaks to the strength of the labour market, which we expect to be confirmed by the data due later this week. But we aren’t getting carried away. Sentiment toward ‘future financial conditions’ is still well below average and overall confidence is deeply negative.”

This week’s index revealed that “Weekly inflation expectations” increased 0.2ppt to 5.8 per cent, though the four-week moving average was unchanged at 5.7 per cent.

All the confidence subindices improved except “Time to buy a major household item”, which dropped 0.5 per cent.

“Current financial conditions” rose 5.4 per cent. “Future financial conditions” gained 8.2 per cent from the week before and moved back above 100 and into net positive territory for the first time since late May.

“Current economic conditions” bounced 13.8 per cent, to its highest level since early June. “Future economic conditions” lifted 0.6 per cent.