Consumer Confidence Improves But Households Cautious

Westpac consumer confidence rose 4.3points in Q1 to 93.2. While it is still below the breakeven-100 level (pessimists exceed optimists), it is the highest reading since Q4 2021. The move higher was driven by households being more positive on their financial situation. The OCR has been on hold since May last year and with payment pressures no longer rising, inflation easing and wages increasing consumers are starting to feel less pessimistic.

• The pickup in confidence was predominantly in the perception of present conditions which rose 8 points to 85.1 with expected conditions rising 1.9 points to 98.6, but both remain well below historical averages.
• The improvement in financial conditions has led to more people saying it is a good time to make a major purchase. Westpac notes that households remain cautious and retailers are reporting that spending is concentrated on essentials. It may still be too early to expect a pickup in consumer spending.
• Most households still expect “tough economic times over the year ahead” but they are becoming cautiously more optimistic about the outlook.