It’s the end of summer holidays for many Australians. People are returning to work, in many instances with far smaller annual leave balances that just a few weeks ago.
It’s enough to make some people feel a little glum, understandably. However, you can take solstice that you’re not alone.
According to the latest ANZ-Roy Morgan consumer confidence index, sentiment levels slipped last week, an outcome that ANZ says likely reflects the end of summer holidays for many Australians.
“The new year jump in consumer confidence partly unwound last week, likely reflecting the end of the traditional holiday season and perhaps the fall in domestic stock prices,” said Jo Masters, senior economist at ANZ.
“Recent headlines about Brexit and ongoing uncertainty about the impact of a Trump presidency may also have impacted,” she added.
ANZ did not specify whether the tragic events in Melbourne’s CBD last Friday played a part.
The headline confidence index slipped 1.9% to 117.0, the second decline in a row, largely unwinding the 5.9% surge seen at the start of 2017.
Despite recent weakness, the index still remains above its long-run average of 112.8. Put another way, Australians, collectively, remain more optimistic than usual right now.
Mirroring the decline in the headline confidence index, four of the survey’s five components weakened during the week, although views towards current family finances bucked the trend, a promising sign on the outlook for near-term household spending.
It increased by 0.7%, partially offsetting a decline in expectations for finances looking 12 months ahead which slid by 3.0%, leaving it at the lowest level seen in five weeks.
“Encouragingly, households’ views of overall financial conditions remain well above the long term trend, suggesting a positive outlook for consumer spending,” said Masters.
Elsewhere, perceptions towards the economic outlook also weakened, albeit after rising solidly in previous weeks.
“Households’ views of economic conditions over the next 12 months declined 2.0% after rising 11.2% over the previous two weeks. Households’ views of economic conditions over the next five years fell 2.4% after a 2.8% rise over the previous two weeks,” Masters said.
The final component of the survey — whether now was a good time to buy a major household item — also reversed, declining 2.5% from a week earlier.
Though it does not feed into the headline confidence index, ANZ said that inflation expectations continued to lift with the surveys four-week moving average rising for a third consecutive week, increasing to 4.4% from 4.0% in mid-December.
Masters says that the lift in inflation expectations “likely reflects an increase in petrol prices rather than a broad-based increase in inflationary pressures”.
While this may prove to be a temporary fuel-based bump, the Reserve Bank of Australia is watching trends in inflation expectations closely given its relationship to changes in wage costs and interest rate expectations.
Australia’s December quarter consumer price inflation (CPI) report, released on Wednesday, will likely prove influential on inflation expectations, particularly the headline CPI figure which has a tendency to resonate more with households rather than the core figure which is given more weight by financial markets.