- Australian consumer confidence “took a beating last week”, according to ANZ Bank.
- Sentiment towards finances, the economy and spending all fell. The steepest declines were seen in current financial conditions.
- A rate cut from the RBA is now fully priced by the end of this year.
- The steep deterioration in sentiment coincided with the RBA downgrading its forecasts for Australian economic growth in the coming years .
Renewed talk of rate cuts from the RBA hasn’t energised Australians much.
Instead, it appears they may be more focused on the reasons rate cuts are being mooted: a slowdown in Australian economic growth.
The ANZ-Roy Morgan Australian consumer confidence index slumped 3.4% last week to 114.1, leaving it at the lowest level in three months.
“Consumer confidence took a beating last week, most likely on the back of the RBA’s downgrade to its economic outlook,” said David Plank, Head of Australian Economics at ANZ Bank.
“The fall reversed all the gains and then some since the weak reading seen at the start of this year. Weak retail sales and building approvals data may also have negatively impacted sentiment.”
Sentiment towards current economic conditions fell by 3.2%, its first fall in four weeks, while future economic conditions fell by a slightly larger 3.8%.
That may explain the steep fall seem in sentiment towards current financial conditions which plunged by 7.1% from a week earlier. Views towards finances in the year ahead also weakened, falling by 1.6%.
Adding to concerns about household spending, the largest part of the Australian economy at over 50%, the ‘time to buy a household item’ index fell for a fourth consecutive week, sliding 1.6% to the lowest level since late October.
Australian retail sales slumped 0.4% in December. Non-food sales fell by an even larger 1%. Over the quarter, total retail sales volumes rose by just 0.1%, smaller than the 0.2% gain in the three months to September.
Along with a raft of other weak economic data, especially for the housing sector, that has seen financial markets move to price in a rate cut from the RBA by the end of this year.
While the latest consumer confidence read will do little to dispel concerns about the health of household spending, Plank is not giving up on consumers just yet.
“Confidence still remains above the long-run average, however, as does the key current financial conditions sub-index,” he says.
“So we aren’t giving up on the consumer just yet.”
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