Consumer confidence extended its losses for a second week, with the headline index falling 1.24% to 111.2 - below its long run average.
Households’ views towards their current finances fell 1.2% on a weekly basis, while views about future finances fell 0.6%.
Households’ expectations for economic conditions next year registered the sharpest drop, a fall of 5.3% taking the index to its lowest level since February 2016. Expectations for economic conditions over the next five years rose slightly by 0.2%, but are still close to the lowest level for 2017.
The ‘good time to buy a household item’ index fell by 0.2%, after a sharp drop recorded last week.
Inflation expectations were unchanged at 4.3%, with the four week moving average holding steady at 4.3%.
ANZ’S HEAD OF AUSTRALIAN ECONOMICS DAVID PLANK COMMENTED:
“Most of the fall in consumer confidence was driven by expectations for economic conditions over the coming year. These are now the lowest they’ve been since early 2016, before the RBA resumed its easing cycle. While longer-term expectations gained slightly, they are still close to their lowest level for the year. We think continued low wage growth is likely behind the weakness in these categories. Rising geopolitical risks might also have fed into households’ concerns about the outlook.
The weakness in consumer sentiment stands in contrast to the more optimistic outlook of firms and the very high level of reported business conditions. The strong March employment figures were consistent with this bullish business sentiment. It is possible that we are in for a period of stronger job reports that further close the gap between the official figures and what surveys such as ANZ job ads and NAB business conditions are telling us. This may be enough to prevent a further decline in consumer sentiment. But we doubt we will see a sustained improvement until income growth picks up.”