Australian consumers are feeling better about the current state of their finances than they have in over a decade, according to the latest ANZ-Roy Morgan survey.
It’s a result that both the Reserve Bank and Federal Government are likely to claim credit for.
ANZ-Roy Morgan’s index for consumers’ ‘financial situation compared to a year ago’ last week rose 5.9% to an all-time high of 116.8 points.
This figure implies that nearly 17% of consumers believe their household finances are better than they were a year ago.
ANZ Head of Australian Economics David Plank said Aussie sentiment toward current finances had risen for three consecutive weeks, taking it to its highest level since the weekly surveys began 11 years ago in 2008.
“This has been sufficient to push overall confidence back above its long-run average,” Mr Plank said.
The overall measure of Australian consumer confidence rose 1.2% last week to 114.1, above the monthly average since 1990 of 113.1.
Mr Plank said that given the volatile news surrounding the US-China trade relations the resulting weakness on the share market, the gain in consumer confidence is pleasing.
Fiscal and monetary stimulus taking effect?
The positive results appear to be an affirmation of both the RBA’s recent rate cuts and the Federal Government’s tax offsets.
“Lower interest rates and taxes are undoubtedly helping,” Mr Plank said.
But Aussie consumers appear to be less optimistic about their future finances, with the ‘financial situation next year’ index falling last week from 128.5 to 124.7.
CommSec Chief Economist Craig James agreed that lower interest rates and taxes were playing a part, saying that given the results of the survey are an objective assessment by consumers of their own finances, they cannot be underestimated.
“Aussie consumers conclude that low interest rates, firm job market, real wage gains (wage growth ahead of prices), a sharemarket near record highs, an increase in the minimum wage and tax cuts are all serving to support household finances,” he said.
“The only real ‘negatives’ are the weak Aussie dollar and relatively-high fuel prices.”
While the RBA – which closely watches the ANZ-Roy Morgan weekly assessment of consumer attitudes – will be buoyed by the latest survey, Mr James still expects it to cut rates again in November 2019 and February 2020.