ANZ-Roy Morgan Australian Consumer Confidence fell 2.2% last week, bringing the index down to 109.2 from a high of 118.4 only three weeks earlier. The fall in sentiment was broad based, with four out of five subindices posting declines.
Households’ views towards current financial conditions slipped 2.1% last week following a 2.0% fall previously. Views towards future financial conditions fell a solid 5.3%, more than reversing the prior week’s 1.9% rise. While sentiment towards current financial conditions remains elevated in level terms, views towards future financial conditions have slipped well below their long term average.
Consumers’ views towards current economic conditions fell 1.5% last week – the third straight weekly fall. Sentiment around future economic conditions fell a sharp 6.8% last week. While views towards economic conditions have been quite volatile recently, the index is now close to its lowest on record.
Inflation expectations edged up to 4.5% on a four-week moving average basis, with the weekly value coming in at 4.4%.
ANZ’S HEAD OF AUSTRALIAN ECONOMICS, DAVID PLANK, COMMENTED:
“The fall in consumer confidence over the last three weeks has been both sharp and broadly based. Despite another solid labour report last week, headline confidence and in particular sentiment around personal finances, appear to be faltering. This is likely to be reflecting households’ concerns around lacklustre wage growth along with seemingly ever-rising energy costs. The current controversy surrounding dual-citizenship in Parliament may have also weighed on sentiment, especially views about future economic conditions. Overall consumer confidence is at its lowest since mid-2015.
Last week’s wage report showed a disappointing deceleration in private-sector wage growth. Though the larger-than-usual minimum wage hike will boost reported wage growth in Q3, we believe that any increase further out is only likely to be gradual, given the level of spare capacity in the labour market.
Overall, despite a strong labour market and robust business conditions, we believe that any recovery in consumer confidence is likely to be capped until households experience a material acceleration in wage growth.”