Australian consumer confidence falls again as low wage growth weighs on the outlook

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Australian consumer confidence has fallen for the second straight week, as Aussie consumers taking a more bearish view of the economy’s near-term prospects.

The ANZ/Roy Morgan Consumer Confidence Index showed a fall of 1.24% last week to 111.2, and the index is now below its long-run average. Here’s the chart:

According to ANZ economists David Plank and Kaushik Baidya, “most of the fall in consumer confidence was driven by expectations for economic conditions over the coming year. These are now the lowest they’ve been since early 2016, before the RBA resumed its easing cycle”.

Australian households’ expectations for economic conditions over the next 12 months fell to their lowest level since February 2016, registering a fall of 5.3%.

“We think continued low wage growth is likely behind the weakness in these categories. Rising geopolitical risks might also have fed into households’ concerns about the outlook,” the bank said. This chart shows the fall:

After falling sharply last week, confidence in the economic outlook over the next 5 years increased slightly.

The ANZ economists noted that recent consumer confidence surveys contrast with the more bullish sentiment from Australian businesses.

“The weakness in consumer sentiment stands in contrast to the more optimistic outlook of firms and the very high level of reported business conditions. The strong March employment figures were consistent with this bullish business sentiment.”

“It is possible that we are in for a period of stronger job reports that further close the gap between the official figures and what surveys such as ANZ job ads and NAB business conditions are telling us.”

“This may be enough to prevent a further decline in consumer sentiment. But we doubt we will see a sustained improvement until income growth picks up.”

Consumer expectations for inflation in the latest survey were unchanged at 4.3%:

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