Consumer confidence gets a post-budget bounce

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on May 18, 2021
Consumer confidence gets a post-budget bounce

Australians are feeling a little more confident after last week's Federal Budget, and they're keen to get out and spend.

That's according to both the latest ANZ-Roy Morgan Australian Consumer Confidence index and Commonwealth Bank Household Spending Intentions (HSI) data for April. 

According to ANZ-Roy Morgan's data, consumer confidence increased 0.8% last week, due to both the warm response to the Federal Budget (the most well-received in more than a decade) and a lack of local coronavirus cases. 

"Consumer confidence increased by 0.8%, with sentiment in Sydney jumping 5.4% as no new community cases of COVID-19 were reported," ANZ Head of Australian Economics David Plank said. 

"The greater than expected spending promised by the government in the federal budget may have also provided a boost to confidence.

"Among the detail, 45% of the responders said it is a ‘good time to buy a major household item’ versus 22% for it being a ‘bad time to buy’, which are respectively the highest and lowest values since February 2020."

See also: Federal Budget 2021-22 - what's in it for savers?


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                        The consumer confidence level of 112.5 is almost exactly the same as the rolling four-week average of 112.3, as well as the monthly average of 112.6 since 1990. 

                        ‘Time to buy a major household item’ gained 6.2%, ‘Current financial conditions’ rose 1.6%, while ‘future financial conditions’ expectations were up 0.1%.

                        These numbers are much higher compared to 12-months prior, when confidence and future expectations plunged to near-record lows at the beginning of the COVID crisis. 

                        Another consumer confidence index - the Westpac-Melbourne Institute consumer sentiment survey - reported a low point of 75.6 in April 2020

                        ANZ's weekly data meanwhile found the four-week moving average was as low as 84.2 at this point in 2020. 

                        ANZRM1.JPG

                        Related: House price increases weigh on consumer confidence

                        Home buying, entertainment spending intentions climb 

                        A year on from April 2020's lockdown-induced lows, spending intentions across all seven categories tracked by Commonwealth Bank (CBA) showed "strong improvement, in a sign the economy advanced its recovery in April". 

                        “This comes as no surprise as we know that April 2020 was the low-point for spending as the first wave of Covid-19 restrictions hit Australians,” said CBA Chief Economist Stephen Halmarick.

                        “A year later, the economy has recovered strongly from Covid-19 impacts, with employment above pre-pandemic levels and household spending intentions on the rise as consumers once again feel confident about their economic prospects."

                        The HSI series covers around 55% of Australia's total consumer spend across; retail, travel, education, entertainment, motor vehicles, and health and fitness.

                        In particular, home buying intentions continued to surge, as both loan applications and related Google searches increased. 

                        Travel spending intentions "skyrocketed" compared to 12 months ago when almost all travel was halted, while entertainment spending in particular was also much higher at bars and pubs, restaurants, movie theatres, and live theatre.

                        Related: Travel bubble, discount flights boosting confidence and spending already

                        According to Mr Halmarick, the increase in spending intentions across all of these was reflected in last week's budget. 

                        “The Budget’s targeted support programs aim to put more people into jobs and ensure the economic recovery is widespread,” Mr Halmarick said.

                        “We expect the residential property market to be a key source of support for Australia’s economy in 2021, driven largely by the very low level of interest rates."


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                        Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of August 20, 2022. View disclaimer.


                        Photo by krakenimages on Unsplash   

                        Disclaimers

                        The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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                        William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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