ANZ-Roy Morgan Australian Consumer Confidence fell 2.6% last week to 119.5, retracing gains over the previous two weeks. All subindices posted declines, though the ‘current economic conditions’ subindex was the main culprit.
Households’ sentiment towards current economic conditions dropped a sharp 6%, unwinding much of the 8.3% cumulative rise over the previous two weeks. Views towards future conditions slipped 0.7%, its second straight weekly fall.
Consumers were also less optimistic about financial conditions this week. Views towards current and future conditions fell 2.6% and 1.8% respectively. In four week moving average terms, aggregate financial conditions sit at 116.0, down from their high of 118.5, two weeks ago.
Sentiment around the ‘time to buy a household item’ fell for the fourth straight week, slipping 1.9% to 136.9. Inflation expectations edged down to 4.4% on a four week basis.
ANZ’S HEAD OF AUSTRALIAN ECONOMICS, DAVID PLANK, COMMENTED:
“Given the tumble that global and domestic equities took last week, it is unsurprising to see confidence falter. In particular, views around current economic conditions fell sharply last week, though they remain well above their long term average (113.2 vs 101.8).
While overall sentiment has risen considerably since Q3 2017, much of it has been driven by an improvement in views towards economic conditions. In contrast, views towards financial conditions rose less sharply over the same period and have recently begun deteriorating. This likely reflects the lack of pass through (yet) to wages, despite strong employment growth. Together with moderating house prices and high levels of debt, household finances remain under pressure. On this front, Governor Lowe’s speech last week, which in our view effectively removed the prospect of a rate hike this year, should provide some comfort.”
The upcoming employment and wage numbers will likely set the tone for confidence over the coming weeks. Further financial market volatility may also have an impact.”