(Australian Associated Press)
Consumers are heading into Christmas much merrier than in 2014, despite a dip in confidence levels last week.
The latest ANZ-Roy Morgan consumer sentiment index slipped 0.8 per cent for the week to December 13, following a solid bounce the previous week.
But confidence levels remains much stronger than last Christmas, up 4.7 per cent compared to a year ago and well above the long-run average.
ANZ’s co-head of Australian economics Felicity Emmett said strong employment figures released last week had helped support confidence, but people had perhaps been a bit worried ahead of the government’s mid-year budget update on Tuesday.
“What will be important for consumer confidence going forward, however, will be how the Turnbull government responds to the deterioration in the fiscal outlook,” she said.
“In the near term, though, the strength in the labour market is likely to keep consumer confidence elevated.”
In it’s mid-year budget update, the government slashed its economic growth forecasts and forecast a $2.3 billion blowout in the budget deficit to $37.4 billion for 2015/16.
But while media reports ahead of Tuesday’s budget update dampened overall confidence levels, the ANZ-Roy Morgan index showed consumers were keen to hit the shops.
“Importantly, the measure of whether it was a good time to buy a major household item lifted to the highest in nearly six months – a result that bodes well during the festive season,” CommSec economist Savanth Sebastian said.
ANZ economists said last week’s decline in sentiment was relatively broad-based, with confidence around both financial conditions and the economic outlook sagging.
Confidence plummeted 12.7 per cent in WA, likely driven by concerns around job security following the announcement of mine closures.
Meanwhile, NSW sentiment surged 5.4 per cent after the state’s strong employment numbers.