By Jason Cadden
(Australian Associated Press)
Consumers have started the year in an upbeat mood, thanks to confidence about household finances reaching a seven-year high.
The ANZ-Roy Morgan consumer confidence index rose 0.8 per cent in the week ending January 3, and was up 4.1 per cent for the year.
That’s kept confidence above its long-term average and reversed the fall suffered in the last survey of 2015 in mid December.
ANZ chief economist Warren Hogan said confidence has been gradually improving ever since Malcolm Turnbull became prime minister in September.
“While consumers are generally optimistic in January due to the holiday season, it is a good sign for the economy that consumers are particularly upbeat about their current financial situation,” he said.
The sub index asking consumers about their current financial position rose 6.4 per cent to the highest level since the onset of the global financial crisis.
“This index is a reasonable indicator of consumer spending, suggesting a strong Christmas and holiday spending period is underway,” Mr Hogan said.
“Stronger employment conditions and the falling petrol price appear to be the major factors driving consumer optimism.”
CommSec’s chief economist Craig James said the surge in consumer confidence bodes well for retailers, who have already enjoyed strong post Christmas sales.
“The Reserve Bank believes that measures of consumer confidence are worth watching especially those questions dealing with family finances or spending intentions,” he said.
“No doubt lower petrol prices and low interest rates are contributing to the solid state of family finances and that means good news for retailers.”
Mr James said it is particularly encouraging that the number of consumers believing that now would be a good time to buy a major household item is at a six-month high.