Australians appear to have gotten over their post-festive season blues to a large degree, despite further worrying signs for the global economy.
The ANZ-Roy Morgan consumer confidence index rose 1.4 per cent in the past week, recouping much of the 2.2 per cent drop of the past week, to stand comfortably above its long-run average.
“The resilience shown by Australian households amidst weak global and domestic cues is encouraging,” ANZ head of Australian economics David Plank said.
Consumer confidence is a key pointer to future household spending.
Despite just navigating the busiest shopping period of the year over Christmas and the New Year, consumers appear to be ready to put their hands in their pockets again.
A component of Tuesday’s report – the ‘time to buy a household item’ sub-index – jumped 3.9 per cent in the past week, taking it to its highest level since early October.
A drop in petrol prices in recent weeks would have eased pressures on the household budget.
The Australian Institute of Petroleum’s weekly report shows the national average price for unleaded petrol declined a further 0.9 cents a litre to a 17-month low of 121.2 cents.
CommSec chief economist Craig James calculates that over the year petrol prices fell nearly 12 per cent, the biggest decline in more than two years.
Mr James noted that prices are now probably as good as it gets, with wholesale prices pointing to a lift in coming weeks.
“Average Australian prices are headed for $1.25 to $1.30 a litre – levels that shouldn’t play havoc with consumer spending plans,” he said.
Last week’s disappointing confidence report – showing the largest drop in the index in three months – was blamed in part on deteriorating global conditions.
Recent Chinese data showing weaker-than-expected trade results are unlikely to lift those concerns, and a further sign the Asian giant’s economy is slowing.
This is a particular worry for Australia given China is its No.1 trading partner.
Colin Brinsden is AAP’s former economics correspondent based in the Canberra Press Gallery