Consumer confidence shows outlook improving

Photo / Richard Robinson

Consumer confidence is the highest it has been since December 2007, according to the monthly ANZ-Roy Morgan survey.

But the improvement relates to the outlook rather than current conditions, and the latter tends to be the best indicator for retail spending.

ANZ chief economist Cameron Bagrie said the October survey was consistent with other soft data (about business or consumer sentiment) which were picking up but which on examination showed a similar split between views of current and future conditions.

The biggest improvement this month was in respondents' views of the outlook for the economy as a whole over the next 12 months. A net 32 per cent are optimistic, up 13 points from last month.

And a net 43 per cent expect to be better off themselves in a year's time, but when asked if they are better or worse off right now than they were a year ago, a net 17 per cent still feel worse off, continuing what is only a slowly improving trend since a mid-year trough.

Bagrie said it was normal for expectations to improve before current conditions did, but the magnitude of the gap called into question whether there was anything of substance there.

There was renewed optimism in the property market, but interest rates were moving up, households had a lot of debt and the unemployment rate was still rising. "So there are still some very major headwinds there."

Retailers would no doubt be heartened to see a 10-point rise to a net 13 per cent in the net percentage of people saying now was a good time to buy a major household item, he said, especially with the Christmas shopping season about to kick off.