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Consumers unlikely to spend more as confidence remains fairly flat


Australians are slightly less concerned about the global economy, but there’s not much indication they’re going to spend more.

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Consumer confidence rose 0.2 per cent in the week ending February 7, breaking a four-week decline, according to the latest ANZ-Roy Morgan consumer confidence index.

While turmoil on global financial markets have weakened consumer confidence recently, ANZ co-head of Australian economics Felicity Emmett says the poll result suggests concerns have abated somewhat.

“As a small, open economy, Australia remains vulnerable to the fortunes of the global economy,” she said on Tuesday.

“The domestic economy, however, is currently not in bad shape, with the unemployment rate improving significantly over recent months.

“A solid rise of 1 per cent in the ANZ measure of job ads in January suggests the near-term employment outlook remains positive, which should play some part in supporting consumer confidence.”

However, she said the real question would be whether rising confidence translates into stronger spending this year, as predicted by the Reserve Bank of Australia.

“Last week’s December retail numbers were disappointing and suggest that household consumption growth remains moderate at best,” Emmett said.

“Further improvements in the labour market and confidence are likely to be required to drive a stronger recovery in consumer spending.”

The subindex on respondents’ current financial situation compared to a year ago was more upbeat, rising 0.9 per cent, but people were less optimistic about the year ahead.

Confidence about their own finances for the next 12 months fell 1.3 per cent, according to the index.

Respondents were also pessimistic about the broader economic outlook for the next 12 months, with confidence falling 1.7 per cent.


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