Australian consumer confidence fell for the second straight week and is trending to towards a lower base, according to the ANZ-Roy Morgan consumer confidence index.
The weekly reading ticked lower by 0.5% to 111.8, below its long-run average of 112.9 “where it has been hovering for the last couple of months”, according to ANZ.
While there wasn’t the significant volatility seen last week in any of the sub-indexes, the results show that the current headwinds in Australia’s economy are continuing to weigh on consumer sentiment.
Both measures of confidence around household finances moved lower last week. Current financial conditions ticked lower by 0.2%, while views towards future financial conditions fell by 1.7% after four straight weeks of gains.
The notable volatility in views towards current financial conditions appears to have subsided, after sentiment collapsed following the announcement of increased energy prices before bouncing back last week.
According to ANZ economists Giulia Lavinia Specchia and Felicity Emmett, “persistently weak wage growth amidst high household debt and hits to household budgets from rising energy costs are all factors that are weighing on confidence”.
Looking at the broader economy, views towards current economic conditions moved 2.4% higher, while future economic conditions fell by 0.4%.
The measure of whether now is a good time to buy a household item fell by 1.8% last week, but remains elevated in terms of its long-run average. As usual, inflation expectations remained unchanged at 4.2%.
Specchia and Emmett said that the recent fall in the unemployment rate was helping to buffer consumer confidence, despite the broader negative effects of low wage growth and high mortgage costs.
“The labour and housing markets will likely continue to be important influences on confidence. Any further improvement in the unemployment rate would be positive, although the recent softness in the housing market suggests that it will not provide significant support for confidence over the near term.”