Consumer confidence in Australia has rebounded, marking a 1.3-point increase to reach 83.8, following the Albanese government's disclosure of the Stage 3 tax cut adjustments.
The unveiling of these tax alterations by the government prompted a positive shift in consumer sentiment, contrasting with the previous week’s decline, which was fueled by speculations surrounding the tax modifications.
However, despite the uptick, consumer confidence continued its unprecedented streak, remaining below the 85-mark for 53 consecutive weeks. Nevertheless, the current reading surpassed the figures from the same week last year, standing 0.2 points above, at 86.6, albeit remaining 5.8 points higher than the 2023 weekly average of 78.
Regional disparities in consumer sentiment were evident, with New South Wales, Queensland, Western Australia, and South Australia witnessing an increase, while Victoria experienced a decline.
In terms of current financial conditions, 21% (up 2ppts) of Australians perceived their families to be “better off” financially compared to last year, while 52% (up 2ppts) believed they were “worse off.” Looking ahead, 33% (1ppt) expected to be “better off” financially a year from now, mirroring the same percentage (up 1ppt) expecting to be “worse off.”
Regarding short-term economic confidence, 11% (up 2ppts) anticipated “good times” for the Australian economy in the next 12 months, the highest figure recorded since April 2022, while 30% (down 1ppt) expected “bad times,” the lowest since May 2022.
Medium-term economic sentiment saw an improvement, with 14% (up 3ppts) of Australians expecting “good times' for the economy over the next five years, compared to 19% (down 2ppts) expecting “bad times.”
Buying intentions remained relatively steady, with 23% (up 1ppt) of Australians considering it a “good time to buy” major household items, while 49% (up 1ppt) viewed it as a “bad time.”
Commenting on the trends, Adelaide Timbrell, ANZ senior economist, attributed the increase in consumer confidence to growing optimism about the future economy, bolstered by adjustments to the Stage 3 tax cuts. The changes are expected to reduce taxes for employees earning under $150,000 annually.
Timbrell also said that the Reserve Bank maintaining its interest rates at 4.35% could further support confidence among homeowners, especially those with mortgages. Notably, inflation expectations have also eased, reaching their lowest four-week average since February 2022.
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