ANZ-Roy Morgan Australian Consumer Confidence fell a sharp 4.0% last week, partially unwinding the gains over the previous two weeks. Though four out of five subindices posted declines, the fall in confidence was driven primarily by a sharp reversal of sentiment around economic conditions.
In contrast to these declines, households’ views towards current financial conditions improved 2.8% - more than reversing the 1.2% fall in the previous week. Meanwhile, views towards future financial conditions fell 2.3%, its third consecutive fall.
Consumers’ views towards both current and future economic conditions eased considerably last week, largely unwinding the previous week’s gains. Sentiment around current and future conditions fell 10.7% and 7.3% respectively.
The ‘time to buy a major household item’ fell a 4.6% last week. Despite trending lower recently, this sub-index remains well above its long term average.
Inflation expectations edged up to 4.4% on a four-week moving average basis, with the weekly value coming in at 4.5%.
ANZ’S HEAD OF AUSTRALIAN ECONOMICS, DAVID PLANK, COMMENTED:
“Stepping back from the recent volatility in survey responses, consumer confidence remains above its long term average. Confidence has staged an impressive recovery since its low point in May, and we expect that a gradually strengthening labour market and accommodative monetary conditions will broadly continue to support confidence over the coming weeks.
That said, households continue to face a number of headwinds - subdued wage growth, slower growth in house prices and high household indebtedness – which will likely cap the rise in sentiment. In addition, higher energy prices will weigh on households’ disposable incomes. As such, we remain cautious about the outlook for consumer spending despite the solid Q2 retail sales outcome.
Given the importance of the labour market to both near term confidence and monetary policy, we will be closely watching next week’s Wage Price Index and Labour Force releases.”