ANZ-Roy Morgan Consumer Confidence reports “Turnbull turnaround”

ANZ-Roy Morgan Australian Consumer Confidence surged 8.7% to 114.5 this week, which more than retraces the 7.1% decline over the previous two weeks and leaves confidence above long-run average levels.

With no other substantive economic news or market movements to explain the outcome, the driver of the bounce was most likely optimism around the elevation of Australia’s Communication Minister, Malcolm Turnbull, to the Prime Ministership, the weekly ANZ-Roy Morgan index said.

The bounce in confidence was broad-based across the subindices. In particular, views on economic conditions over the next year jumped 25.8%, the second largest one week gain since the weekly series began in 2008. Confidence in the economy over the next five years also gained a robust 13.4%, but remains well below its long-run average.

Australian consumers’ views on their financial positions compared to a year ago rose modestly and are near the multi-year highs registered a few weeks ago.

ANZ chief economist Warren Hogan commented: “The sharp jump in ANZ-Roy Morgan Australian Consumer Confidence last week is a clear vote of confidence in the new Prime Minister, Malcolm Turnbull. A similar surge in business confidence was evident when the Coalition won government in late 2013.

“For the bounce to be sustained, however, the new Prime Minister and his colleagues will need to deliver a medium-term reform strategy in the context of a clear economic story for the country.

“We believe the new Prime Minister’s first 100 days in office will be essential to formulating a new narrative for the economy that underpins confidence in the economic outlook.

“Expectations are clearly high, not unlike when the Coalition initially won power, and the community will be sensitive to disappointment on this front. A clear economic strategy is critical. Otherwise, consumer caution and gloom in the long-term outlook could easily re-emerge, given weak wages growth and sub-par global economic activity.”

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