The ANZ – Roy Morgan weekly consumer confidence survey this morning showed a small increase in confidence of 0.1% to 109.8 in the week ending April 12. This follows the 2.3% fall the previous week, which took confidence to 8-month lows.
That leaves confidence in the “danger zone” as it fades ahead of the federal Budget, the ANZ said.
Highlighting the concern for the Budget and consumer futures the survey showed that there was “deteriorating confidence around the economic outlook with the economic conditions index falling for the second consecutive week. The subindex on economic conditions in the year ahead fell 4%, and in the next five years fell 3.4%. Theses indices remain well below their long run averages.”
ANZ Chief economist Warren Hogan noted that these views about economic conditions remain well below average.
“This is not surprising given the ramp-up of discussion of Australia’s fiscal challenges in the lead-up to the Commonwealth Budget next month,” Hogan added.
But he is concerned that the we may see a rerun of what happened last April once Budget leaks started in earnest.
“Given the apparent sensitivity of the Australian consumer to budget issues, it will be important to monitor consumer confidence closely over the weeks ahead. Our main concern for the economy would be another strongly adverse response to the budget as seen last year. This not only risks undermining retail spending but also business confidence more widely,” he said.
The Government must surely have learnt the lesson of last year and the detrimental impact the Budget has had on confidence and growth in the past year.
We’ll know in a month.