The festive break provided little joy for Australian households

Mark Kolbe/Getty ImagesCheteshwar Pujara may have been a factor behind weaker sentiment levels.
  • The festive break delivered little cheer to Australian households. Confidence levels fell.
  • Sentiment towards Australia’s economic outlook was particularly soft, as were views on current finances.
  • Confidence levels typically lift early in the New Year.

The festive break provided little cheer for Australian households, at least according to the first ANZ-Roy Morgan Consumer Sentiment survey for 2019.

Confidence levels fell, driven primarily by increased concern towards the outlook for the Australian economy.

The headline sentiment index fell 2.2% to 115.2, leaving it below the four-week average of 117.6. Despite the decline, overall sentiment still remains above the 113.0 long-run average seen throughout the survey’s history.

ANZ Bank

Four of the five components weakened in the latest survey.

Sentiment on current financial conditions fell for a third consecutive week, slumping 4.3%. Confidence towards the economic outlook also softened with views looking one and five years ahead declining by 4.2% and 3.1% respectively.

Hinting that Australia’s housing market downturn is impacting demand for major household items, the “time to buy” subindex fell by 1.1%, leaving it further below its long-run average. That result fits with recent data on Australian new car sales which fell heavily in the year to December.

The only component to register an increase was sentiment towards future financial conditions which rose by 1.1%, perhaps assisted by increased chatter that the next move in official interest rates from the RBA may actually be lower, not higher.

David Plank, Head of Australian Economics at ANZ Bank, said the Australian media, along with the performance of the Australian cricket team, may have contributed to the soft result.

“On the domestic front, sentiment has likely been affected by the media‚Äôs focus on falling house prices,” he said. “The cricket may not be helping either!”

Plank said those negatives were likely partially offset by petrol prices which hit the lowest level in 16 months last week.

Internationally, he also noted that most recent news likely dragged on confidence in the latest survey.

“Much of the global news has been negative over recent weeks, with broad weakness in equity prices since the last confidence survey in December reflective of this,” Plank said.

“More recently, the Chinese PMI fell below 50 for the first time in 19 months and the stand-off between the US Congress and the President has intensified.”

While confidence held above its long-run average over most of 2018, Australian retail sales have not with weakness in the September quarter continuing into October. Australia’s November retail sales report will be released on Friday.

The latest survey was conducted on Saturday and Sunday last week, and was based on around 1,000 face-to-face interviews. The results have not been seasonally adjusted, a noteworthy point given confidence levels typically lift over the Christmas and New Year break.

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