Speaking Sensis

The latest Sensis® Consumer Report recorded the largest rise in consumer confidence in a single quarter that it has measured.  Report author Christena Singh tells us why this latest bit of good news is important for the Australian economy.

It is great to see the Sensis® Consumer Report recording the largest increase in consumer confidence since the survey started exactly five years ago. This quarter we saw consumer confidence increase by 18 percentage points to 39 per cent – the strongest level we have seen in 15 months.

To see such strong increases in both consumer and business confidence is heartening, because we are now seeing consistent, strong improvements in the sentiment that forms the heart of the Australian economy.

In fact, many of the indicators of the Australian economy improve, and the much heralded “green shoots” theories abound.  The latest Australian GDP figures were positive, we are not in technical recession, and a range of other statistical indicators are telling the same story.

But what I personally find interesting in the latest data is that consumers are not basing their confidence on the fact that the Australian economy is not in recession. In fact, only four per cent of Australians currently thought that the Australian economy was growing, despite what the national accounts might say.

At the grass roots of the Australia economy, both consumers and businesses are under no illusions about the current state of our economy. What they do agree on is that over the next year they believe think things will pick up.

This is particularly important, because businesses need confidence to invest in their businesses to produce growth and jobs in the future. And business confidence depends on strong consumer confidence – on businesses seeing consumers – customers – coming through their doors.

Consumers have told us they base their confidence most strongly on employment, and in particular at the moment, job security. Some 30 per cent of confident Australians told us they were confident because they had a secure job.  This compared to 21 per cent of worried Australians who told us they were worried because of unemployment.

So it is a vicious circle to some extent – businesses base their confidence on the demand of consumers, who in turn base their confidence on businesses employing them. So if both business and consumer confidence are moving up at the same time it bodes well for the Australian economy for the next year.

You can download a copy of the latest Sensis® Consumer Report here.