The numbers aren’t pretty in the latest ANZ-Roy Morgan weekly consumer confidence survey.
Aussie consumer sentiment fell once again, by a further 1.8%, following a 4% drop in the week prior.
After steadily recovering following a sharp dip in the wake of the May federal budget, consumer optimism has faded over the past month.
Last week’s reading takes the index to 111.7, below its long-run average of 112.9:
While there’s some evidence to suggest wage growth may finally be about to improve, this morning’s reading suggests that for now Australian households are feeling the pain.
Views toward current household finances fell by 2% last week, off-setting most of the previous week’s gain.
Sentiment towards future financial conditions rose by 1.9%, but remains just below its long-run average.
However, the recent negativity towards the broader economy was again the main story. Views toward current economic conditions fell by a further 6%, following a 10% crash in the week prior.
ANZ’s head of Australian economics, David Plank, said that geo-political tension may have been a contributing factor to last week’s result, but he again cited a familiar theme which has kept Aussie consumer confidence stuck in neutral: low wage growth.
“In terms of the most recent move it is possible that the increased tensions around North Korea may have impacted sentiment,” hesaid.
“More broadly, we think it will be difficult for consumer confidence to sustain any material rise until we see a lift in wage growth.”
Low wage growth, high household debt and a recent hike in energy prices effective from July 1 – combine those and it’s perhaps not hard to understand why consumer sentiment has slid into reverse over the past month.
Of course, tomorrow’s wage data from the ABS will be particularly significant in this context.
While the market’s forecast is for Q2 wage growth to remain subdued, recent data suggests that a pickup for long-suffering Australian households may be in the pipeline.
Plank is also cautiously optimistic on that front, adding some extra context to the poor Q1 print in May.
“We do note, however, that while the headline reports on the Q1 release were all about the drop in annual wage growth to a record low the quarterly data actually showed a small acceleration,” he said.
“This gave us the confidence to conclude that wage growth had bottomed. It is possible that this week’s data could reveal a further small acceleration, which holds out the prospect of better news on the wages front over the coming year.”