Consumer confidence edged down 0.7% in the week ending 12 March, after falling a sharp 4.4% the previous week, and is now back just above its long run average. The 4-week moving average now sits at its lowest level since May 2016.
The details were mixed. Households’ views towards their current finances improved 3.1%, while views towards future finances dropped 3.4%. The future finances sub index is now at its lowest level since October 2016 although both sub-indices remain above their long term averages.
Similarly, while views on the 12-month economic outlook fell a sharp 5.2% last week, consumers were slightly more optimistic about the 5-year outlook, which posted a 0.8% rise.
The ‘good time to buy a household item’ sub-index rose 1.3% last week after a sharp 6.5% fall in the previous week.
The series on inflation expectations ticked up last week, bringing the four week average up to 4.6%. Inflation expectations have convincingly turned around and are now well above the sub-4% readings through most of 2016.
ANZ’S SENIOR ECONOMIST FELICITY EMMETT COMMENTED:
“Confidence was relatively stable last week after a period of high volatility. Overall, though, the index has been trending down since February and is now back close to its long term trend.
Ongoing elevated unemployment, as well as persistent weakness in wage growth, is likely to have weighed on confidence over the past few weeks. The recent announcement by the Fair Work Commission that penalty rates in retail and hospitality industries will be cut is also likely to have been a factor. Moreover, the Western Australian election result and poor polling for the Turnbull government suggest some disenchantment with the Liberal-National Coalition.
We expect the February jobs report, out later this week, to show a solid rise in employment, but over the longer term a sharper downtrend in the unemployment rate is likely necessary for a sustained boost to households’ perceptions of their finances.”