Consumer confidence weakens in latest reading
ANZ-Roy Morgan Australian Consumer Confidence failed to sustain the gain showed last week, dropping 1.2% to 112.4. This dragged the index below its long term average. The loss was broad based as four out of the five sub-components showed a decline.
Consumers’ views about the current financial situation fell 1.6% from the previous week, although the index remains comfortably above its long term average. The ‘time to buy a major household item’ index fell 3.0% over the week.
Households’ outlook on near and medium term economic conditions worsened for the second consecutive week, with the indices declining by 2.0% and 2.4% respectively. Both the indices remain below their long term averages.
Views about future financial conditions were the only bright spot in this week’s release, with the index climbing 2.5% to end up at 126.5, the highest since April 17.
Inflation expectations remained unchanged at 4.5% on a four-week moving average basis.
ANZ’S HEAD OF AUSTRALIAN ECONOMICS, DAVID PLANK, COMMENTED
Looking through the volatility, consumer confidence has been hovering around its long run average for some months with no clear trend. This week’s result continues that pattern. That said, there is no doubt that current household conditions remain stretched due to high debt levels and slow wage growth. We suspect these will remain constraints on the outlook for households for some time.
In contrast the outlook for business activity has been increasingly positive in recent months, and we expect an upturn in the non-mining investment cycle to be an important part of Australia’s growth. This should support a continued recovery in the labour market, though we think there is some downside risk to the September employment data due out later this week as a consequence of recent overshooting. A weak employment result would not be concerning to us given the underlying signals about the labour market, but negative media headlines may dampen consumer sentiment somewhat.
