(Australian Associated Press)
Consumer sentiment has bounced back after two weeks of decline on the back of optimism about economic conditions amid strength in the labour market.
The latest ANZ-Roy Morgan Consumer Confidence Index has hit its highest level since April.
ANZ’s head of Australian economics David Plank said the broad-based improvement in sentiment was encouraging.
“The rise in confidence likely reflects ongoing strength in the labour market and appears to have outweighed consumers’ concerns about the rise in retail electricity prices,” he said in a statement.
Official data have shown that about 140,000 jobs were created over the three months to May, and the unemployment rate has fallen 5.5 per cent.
The consumer confidence index rose 2.4 per cent to 114.5 for the week to July 2 after edging 0.5 per cent lower last week, its second weekly decline in a row.
Confidence in current and future financial conditions rose 3.8 per cent and 0.8 per cent respectively.
Sentiment about current and future economic conditions also rose solidly, up 3.7 per cent and 3.0 per cent respectively.
Mr Plank said the labour market will remain an important influence on confidence over the coming months.
“While we expect the pace of jobs growth to moderate – given that the official figures have largely caught up with survey measures such as ANZ Job Ads – a strengthening labour market should continue to broadly support confidence,” he said.
However, Mr Plank said he expected wage growth to remain subdued through the year, keeping underlying inflation below the RBA’s two-to-three per cent target band.