Australian consumer sentiment plunged to a 12-month low last week

Australian consumer sentiment slumped last week with the ANZ-Roy Morgan consumer confidence index sliding 3.6% to 107.0.

The decline, following a 4.6% drop in the previous week, left sentiment at lows last seen in early July 2014.

As we hypothesised earlier today short-term influences, rather than longer-lasting trends, appear to have once again infiltrated survey responses with concerns surrounding Greece’s debt negotiations, along with the plunge in China’s stock market, dragging sentiment lower during the survey period.

Given concerns about both Greece and China have eased in recent days, it suggests that sentiment may well rebound strongly when this week’s survey is released next Tuesday.

Reflective of that view, ANZ chief economist Warren Hogan suggests sentiment is now increasingly sensitive to both domestic and global conditions.

“Consumer confidence has plunged a sharp 8% in the past two weeks, reaching a twelve month low. This follows an eight month high just three weeks ago. The rapid turnaround in sentiment highlights the sensitivity of consumers towards both domestic and global conditions.

Chinese stock market volatility and current negotiations surrounding Greece have dominated the news flow over the past two weeks and spilled over into the local share market. Despite the stabilisation in the unemployment rate, ongoing weakness in consumer confidence would present a risk to the outlook for household spending”.

The survey’s sub-components are listed below. Huge declines were recorded in perceptions towards the economic outlook, both in the year ahead and out five years, with the latter falling to the lowest level seen since the survey first began in October 2008. Clearly these contribute greatly to the decline in the headline index, and create doubt over whether the decline in sentiment will be maintained should the news flow surrounding Greece and China continue to improve.

  • Financial situation compared to a year ago 105.2 (+0.86%)
  • Financial situation next year 119.1 (-2.93%)
  • Economic conditions next year 83.5 (-7.73%)
  • Economic conditions next five years 97.7 (-7.83%)
  • Time to buy a major household item 129.3 (-1.60%)

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