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Change in PM boosts confidence

 

A change in the nation's leader has helped spark a turnaround in consumer confidence.

The ANZ/Roy Morgan weekly consumer confidence index rose 8.7 per cent the week Malcolm Turnbull became prime minister, bouncing back from three weeks of falls.

ANZ chief economist Warren Hogan said the change in prime minister was the most likely reason for the surge in confidence, but the new administration will need to deliver on the economy to maintain that bounce.

"The sharp jump in consumer confidence last week is a clear vote of confidence in the new prime minister, Malcolm Turnbull," he said.

"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," he said.

Mr Hogan said expectations for the new prime minister were clearly high, not unlike when the coalition won government in September 2013, with Tony Abbott as leader.

"The community will be sensitive to disappointment on this front," he said.

"Consumer caution and gloom in the long-term outlook could easily re-emerge, given weak wages growth and sub-par global economic activity."

CommSec chief economist Craig James said performance of the new administration will be a key factor on whether the bounce in consumer confidence will be sustained.

"Increased confidence is certainly a positive for the Australian economy hopefully translating into increased spending, investment and employment," he said.

Mr James said other factors such as a 1.5 per cent lift in the local stock markets over the week and some positive comments on the economy from Reserve Bank governor on the economy would also have helped consumer confidence.

"Even before the latest survey, the RBA noted that views on family finances were above average and supporting consumer spending," he said.

"The latest consumer confidence data just reinforces the Reserve Bank view."

The ANZ survey was conducted the weekend after Malcolm Turnbull beat Tony Abbott in a liberal leadership spill on September 14.