Australian consumer confidence is down again with the latest read from the ANZ – Roy Morgan confidence index dropping 1.2% in the week.
That brings the total four-week fall to 3.8%.
It also brings confidence down below its long-run average for the first time in seven weeks. The ANZ was careful not to blame politics directly, noting it is “difficult to pinpoint the driving forces behind confidence” but said that the recent weakness has likely been affected by “current discussions on policy reform ahead of the Federal Budget in May, as well as the recent weakness in equity markets”.
Whatever the reason it’s weighing on consumers view of their future with the index showing that consumers’ views towards the near-term economic outlook (“economy in the next 12 months”) is down 8% in the last 3 weeks while confidence in the medium-term economic outlook was flat after falling 7.6% the week before.
Felicity Emmett, the ANZ’s head of Australian economics said confidence wasn’t likely to pick up soon. Indeed the, “uncertainty is likely to intensify over the coming weeks and the Government’s ability to deliver a clear and credible economic platform is likely to be a key driver of household confidence in the near term,” Emmett said.
The counterbalance to this negativity Emmett says is the strong labour market and fall in the unemployment rate to 5.8%. But she also said, “further inroads into the unemployment rate are likely to be necessary to spur stronger growth in household confidence and in turn drive stronger growth in consumer spending”.
We’ll get the next update of the strength of the jobs market and the unemployment rate this Thursday when the ABS releases the March data.