Australian confidence confidence continued to slide last week, weighed down by concern over the government’s decision to bring forward the federal budget and the prospect of an early double dissolution election.
That’s the take out from the latest ANZ-Roy Morgan consumer confidence survey with the index sliding 1.3% to 114.5 last week, leaving confidence levels fractionally above their long-run average.
“Confidence has edged lower in the past two weeks following recent highs,” said Felicity Emmett, Australian head of economics at the ANZ, following the release of the latest report.
“While the latest falls in the stock market have likely played a part, we expect that a larger contributing factor is likely to have been the news of a possible double dissolution election.
“Greater uncertainty in the lead-up to an election has the capacity to weigh on confidence, and this uncertainty could well be heightened with the prospect of a double dissolution election, the likes of which we haven’t seen since 1987.”
Emmett also suggests that “the government’s decision to bring forward the Commonwealth budget is likely to put the issue of strained public finances firmly at the front of consumers’ minds”.
If the charts below are anything to go by, it appears that many Australians were busy reading up on what a double dissolution election and early federal budget may bring.
Here’s the spike in Google searchers for “double dissolution” seen in the past week.
And here’s a separate chart measuring searchers for “government budget balance”.
Adding further credence to Emmett’s view, near term sentiment towards family finances and the economy fell heavily during the week, overriding improved confidence levels looking further ahead.
The survey’s gauge on current consumer finances dipped by 4.1%, mirroring a 5.0% slide in sentiment towards the economy in the year ahead. The subindex measuring whether now was a good time to buy a major household item also fell by 0.8%, suggesting increased negativity towards the near-term outlook for the economy and family finance may be weighing on household spending.
Despite the short-term negativity, sentiment towards family finances in the year ahead rose by 0.8% while those towards the economy looking out five years jumped by 2.3%.
Clearly recent developments in Canberra have unnerved Australian households, shaking near term confidence towards finances and the economy.
Uncertainty, whether for financial markets, businesses or households, often detracts from confidence levels, clouding investment decisions as a consequence.
The longer this persists in Canberra, the larger its impact will likely be.