Consumer confidence has risen to a more-than-four-year high thanks to surprisingly strong building approvals and retail spending figures.
The latest ANZ-Roy Morgan Consumer Confidence Index rose 1.2 per cent to 123.5 points in the week to January 14 – its highest level since October 2013.
Pushing the index higher was positive sentiment around current economic conditions, but respondents’ views toward the future financial and economic conditions were slightly weaker than the prior week.
ANZ’s head of Australian economics David Plank said the rise in confidence was consistent with upbeat official data on building approvals and retail sales.
The latest data shows that approvals for the construction of new homes jumped by a surprise 11.7 per cent in November, driven by a spike in apartment and townhouse building in Melbourne.
Retail sales rose 1.2 per cent to $26.4 billion in November, seasonally adjusted, beating the 0.4 per cent rise economists had predicted.
Mr Plank said that overall economic conditions had improved since September, supporting forecasts of solid economic activity in 2018.
He said that persistently low wage growth had constrained a rise in consumer confidence for some time, but things may change this year.
“We see the February wage data as vital to how consumer confidence plays out over the coming months,” he said.
“In the near term, the employment numbers, out later this week, may also have an impact.”