ANZ-Roy Morgan Australian Consumer Confidence fell again this week, the headline index dropping by 1.8% from last week to 111.7 and below the long term average of 112.9. Three out of the five sub-indices posted declines, with the sharpest fall in current economic conditions.
Consumers’ sentiment towards current economic conditions remained sombre, with a fall of 6% coming straight after the prior week’s sharp decline of more than 10%. In contrast, the measure of future economic conditions was up touch to 105.1, just above the long term average for the first time since March.
Attitudes toward current financial conditions fell 2%, largely reversing the previous week’s improvement. On the flipside, views towards future financial conditions were up 1.9% but are still below the long-run average – if only just.
The ‘time to buy a major household item’ fell a 3.0% last week and is now well below its long-run average.
Inflation expectations edged up to 4.6%, a third consecutive weekly rise. The four week moving average stayed at 4.4%.
ANZ’S HEAD OF AUSTRALIAN ECONOMICS, DAVID PLANK, COMMENTED:
“After a period of recovery consumer sentiment has been moving lower in recent weeks and has now dropped below its long-run average. In terms of the most recent move it is possible that the increased tensions around North Korea may have impacted sentiment. More broadly, we think it will be difficult for consumer confidence to sustain any material rise until we see a lift in wage growth. Especially when we consider the high debt levels of households and the pressures they are facing from rising energy costs, among other things.
As far as wages are concerned, we get important data this week in the form of the Q2 Wage Price Index. This is expected to show that wage growth remains subdued. We do note, however, that while the headline reports on the Q1 release were all about the drop in annual wage growth to a record low the quarterly data actually showed a small acceleration. This gave us the confidence to conclude that wage growth had bottomed. It is possible that this week’s data could reveal a further small acceleration, which holds out the prospect of better news on the wages front over the coming year.”