Australian consumer confidence fell back below its long-term average last week, in results ANZ described as “broadly negative”.
The ANZ-Roy Morgan confidence index slipped by 0.7% last week to 112.6, slightly below the monthly average since 1990 of 112.9.
The prevailing theme from last week’s results is that consumers are more confident about current economic and financial conditions, but remain worried about the future.
Views towards the health of the economy over the next 12 months rose by 2.1%, partially offsetting volatility in the prior week which saw a 4.5% fall.
Sentiment towards current household finances dipped slightly, but that followed a 5.3% gain the week before.
ANZ’s Head of Australian Economics, David Plank, said last week’s poor retail sales report was a by-product of Aussie households navigating multiple challenges.
“It is encouraging to see that households’ views towards their current finances remain above the long term average, suggesting that broadly they have been able to weather the pressure on their wallets caused by the jump in energy prices – though not without some hit to retail sales,” Plank said.
“But, given limited wage gains, slowing house-price growth and an already low savings rate, consumers are increasingly less certain about the future, as reflected in the recent downtrend in future conditions.”
Sentiment towards future financial conditions fell for the third straight week, to its lowest level in almost three months.
That was accompanied by a fall views towards the state of the economy over a five-year time frame, which fell by 2.8% to the lowest level in eight weeks.
Last week’s fall was part of a broader downtrend, which has seen sentiment towards future economic conditions fall well below its long-term average in 2017.
“Broadly, consumer confidence continues to track around its long term average supported by still accommodative monetary conditions and a strong labour market,” Plank said.
Offsetting those stimulatory factors, Aussie households remain under pressure from the combination of high household debt with low wage growth, amid signs of a Sydney-led slowdown in the housing market.
In view of that, Plank said key data releases next week — with the quarterly wage price index and monthly employment figures scheduled on Wednesday and Thursday respectively — will be a key driver of consumer confidence towards the end of the year.
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