In a notable rebound, the ANZ-Roy Morgan Consumer Confidence Index has surged by 4.7 points to 89.8 this week, following a strategic interest rate cut by the Reserve Bank, which saw the OCR lowered 0.25 basis points to 4.1%
This adjustment marks the first reduction in over four years since the peak of the COVID-19 pandemic in November 2020, catalysing a positive shift in consumer outlook.
The uplift in consumer confidence was uniformly experienced across all states, with Western Australia recording the most significant rise.
This nationwide improvement suggested a robust recovery in consumer sentiment, potentially heralding increased economic activity in the coming months.
Complementing this positive trend, the Westpac-Melbourne Institute Leading Index rose to a six-month annualised growth rate of 0.58% in January, up from December’s 0.24%. This marks the strongest predicted economic growth since July 2022, when RBA was actively hiking rates.
The past week’s rise in confidence was primarily driven by more positive perceptions of personal financial situations, though improvements were noted across all five indices of the survey.
Twenty-two per cent of Australians now feel they are financially better off than last year – a two-point increase.
Optimism about personal finances over the next year has notably increased, with 37% of respondents expecting to be better off.
Short-term views on the economy have improved slightly, with a small increase in optimism for the next 12 months.
The outlook for the next five years shows a cautious but improved sentiment, reflecting a subtle boost in medium-term economic confidence.
Intentions to purchase major household items remain steady, with 24% of respondents viewing it as a good time to buy, despite prevailing market uncertainties.
ANZ economist Sophia Angala (pictured above) highlighted the comprehensive uplift across all subindices following RBA’s 0.25% rate cut to 4.1% and strong employment data.
“ANZ-Roy Morgan Australian Consumer Confidence has reached its highest since May 2022,” Angala said.
Angala highlighted the variations in confidence across different housing sectors.
“Across the housing cohorts, confidence amongst mortgage holders jumped 10.7pts to its highest level since early May 2022 (before the beginning of the RBA’s hiking cycle) and is now sitting above the confidence of outright homeowners, which remained largely steady last week,” Angala said. “Meanwhile, the confidence of renters also rose 4.0pts, but remains the lowest of the three housing cohorts.”
ANZ expects a gradual rise in consumer confidence throughout the year, supported by tax cuts, subsiding inflation, and further easing by the RBA.
