Australian consumer confidence continued to slide last week, weighed down by uncertainty towards the economic outlook.
The latest ANZ-Roy Morgan consumer confidence index fell by 1% to 113.4, leaving the index just above its long-run average of 112.7.
It has now fallen for three consecutive weeks, leaving the index down 2.6% since mid-March.
According to ANZ, consumers views around the five year economic outlook slumped by 7.6%, while views toward the one year economic outlook declined by a smaller 0.8%.
Offsetting weaker sentiment towards the outlook for the economy, consumers views towards their current finances rose by 2.6%, mirroring an improvement in sentiment towards future finances that inched up by 0.2%.
The fifth component that makes up the index — whether now is a good time to buy a major household item — rose by 0.5%, suggesting the decline in overall confidence levels has yet to impact sentiment towards household spending.
Felicity Emmett, ANZ head of Australian economics, put the decline down to recent weakness in key economic data, along with continued uncertainty towards the upcoming federal budget.
“Confidence has fallen in the past three weeks following recent highs. Disappointing news flow around the economy seems to be creating uncertainty about the economic outlook for households. Employment growth has slowed, retail sales have disappointed and house prices have softened,” said Emmett following the release of the latest confidence report.
“Moreover, government machinations in the lead-up to the Commonwealth Budget may be weighing on the outlook for households. With the Coalition now behind in the polls and Prime Minister Turnbull’s personal ratings falling, optimism over the potential for the current government to implement lasting reform seems to be fading.”
While confidence levels remain above average, it’s clear that uncertainty towards the outlook for the Australian economy is elevated at present.
Should that remain in place, or indeed increase further in the weeks ahead, it will create doubt not only towards the outlook for household spending but as a consequence of it’s importance to the Australian economy, overall economic growth.
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