Consumer confidence lifts in defiance of political turmoil

Consumer confidence figures firmed last week despite volatile markets as the Liberal party leadership spill played out.

A shopper in Sydney’s Pitt St Mall.

Consumer confidence figures surged last week despite the leadership turmoil that plagued Canberra.

Confidence bounced 2.1 per cent, following a 3.5 per cent fall the prior week, according to the ANZ-Roy Morgan Australian Consumer Confidence report.

“We were concerned that the political turmoil in Canberra might deal another blow to consumer sentiment, but it appears the resolution of the leadership crisis has provided some relief — even if it hasn’t provided the coalition with a boost in the political polls,” ANZ Australian economic head David Plank said.

“It is very encouraging to see confidence recover quite strongly after a sharp slide in the previous week.”

The lift in confidence came despite a leadership spill last week which saw Malcolm Turnbull replaced as Prime Minister by Scott Morrison, triggering a cabinet reshuffle and a string of resignations.

Households’ perception of current financial conditions improved 1.2 per cent and sentiment towards future financial conditions shot up 3.1 per cent, partly reversing the 7.6 per cent slide the prior week.

The index is based on interviews held last Saturday and Sunday with around 1000 people.

Consumers were also more optimistic about the current economic conditions, which improved 2.9 per cent, ending a streak of declines.

Still, the ‘time to buy a household item’ subindex slipped 2.2 per cent to below the long term average while four-week moving average inflation expectations were unchanged at 4.3 per cent.

“Despite the tick up in headline confidence, households remain pessimistic about purchasing large household items,” Mr Plank said.

“This subindex has fallen sharply from its recent high in June, and now sits well below its long term average.

“Sluggish wage growth, high levels of debt and decreasing house prices are likely constraining sentiment in this regard.”

Views towards future economic conditions jumped 6.1 per cent, reversing the previous week’s 5.3 per cent decline.