Consumer confidence fell in the week ending 5 March, down 4.4% and almost entirely reversing the previous week’s gain. The 4-week moving average now sits at its lowest level since December 2016.
The weakness in the headline index was broadly based, with the deterioration in households’ views towards their finances driving the losses. Households’ views of current finances fell a sharp 8.6% last week; while sentiment towards future finances also deteriorated, down a sizeable 6.2%.
Households’ views around economic conditions were mixed. While sentiment towards the longer term outlook edged 0.4% lower, sentiment towards the 12 month outlook actually improved 1.2% last week.
After three consecutive weeks of gains, the ‘good time to buy a household item’ sub-index fell 6.5% to its lowest level since early December 2016.
The series on inflation expectations edged down last week, although the four-week moving was unchanged at 4.5%. Inflation expectations have been gradually rising over the past six months - up from a trough of 3.7% in September 2016 - which likely reflects higher petrol prices.
ANZ’S HEAD OF AUSTRALIAN ECONOMICS DAVID PLANK COMMENTED:
“Despite the solid Q4 GDP reading last week, confidence has failed to hold onto the previous week’s gains. While consumer sentiment remains above its long run average, the uptrend has clearly lost momentum in a period of unusually high volatility in survey responses.
The ongoing weakness in wage growth has likely weighed on consumers’ perception of their finances – with the GDP report last week showing growth in wages remained lacklustre in Q4. Last week’s report from the OECD that rising house prices are a threat to the Australian economy may also have unnerved households.
Looking forward, however, we believe that consumer confidence is likely to remain resilient, supported by solid economic fundamentals and an accommodative monetary policy stance.”