Australians are less anxious about their finances but aren't willing to splash out at the shops

Photo by M. Caulfield/WireImage

Courtesy of the National Australia Bank’s latest Consumer Behaviour Survey, here are the most and least anxious Australians based off demographics, earnings levels, education attainment and employment status.

The higher the number, the more anxious that particular cohort is in terms of the outlook for their finances in the future.

Source: NAB

Based on the June quarter survey, a divorced single father aged 30-49 living alone in Adelaide or Darwin with a part-time labouring job earning less than $35,000 with vocational training would be the most anxious person in Australia when it comes to their financial outlook.

While that characterises the most anxious person in the NAB survey, the good news is that Australians, in general, are currently experiencing anxiety levels well below historic levels.

Despite rising 0.2 points to 56.1 in the June quarter, the NAB’s Consumer Anxiety Index is well below the 60.8 average seen over the past four years.

Source: NAB

“Increased anxiety in Q2 2017 reflected heightened consumer concerns about health, cost of living and government policy, which offset lower worries relating to retirement funding and job security,” the NAB said.

Here’s what the NAB found in relation to movements in the survey’s components.

The cost of living (64.2 points) is still weighing most heavily on consumers, and also highlights the big disconnect between low levels of economy-wide inflation and consumer focused costs. More than 1 in 5 (22%) consumers reported “high” levels of concern over the cost of living.

Government policy (62.2 points) was the next biggest cause of anxiety and a “high” concern for around 23% of all Australian consumers.

In contrast, job security (41.9 points) caused the least stress, which likely reflected strong employment growth in the first half of the year and improved labour market conditions also seen in NAB’s Business Survey for some time. Overall, 7 in 10 (70%) consumers reported “low” or “very low” levels of anxiety over their job security. As a result, anxiety levels relating to job security now sits at a new survey low.

The level of concern arising from retirement funding (57.1 points) also receded in Q2 2017 with almost 1 in 2 (49%) consumers reporting “low” or “very low” anxiety.

But when it came to health (55.2 points), the number of consumers reporting “low” or “very low” anxiety fell to 53%, down from 62% in Q1 2017.

This chart from the NAB shows the evolution in each of those components since the survey’s inception.

Source: NAB

The good news is that all components are trending lower, especially when it comes to job security and the ability to fund retirement.

This likely reflects strong labour market conditions so far this year, along with strong house price growth — the largest financial asset for many households — in the nation’s heavily populated southeastern corner.

And, mirroring the decline in overall anxiety levels, the level of Australians experiencing “extreme” levels of financial stress also fell, both from the March quarter and from a year earlier.

Source: NAB

However, while anxiety levels remain below recent levels with less Australians indicating that they are experiencing extreme levels of financial stress, that has yet to lead to a pickup in discretionary spending by households.

This chart shows the net balance of respondents who indicated whether they increased or decreased spending levels on essential and non-essential goods and services.

Source: NAB

While spending levels on essentials increased on balance during the quarter, outlays on discretionary items continued to contract, at least based on the NAB survey.

“We noted a big increase in the number of consumers spending more on essentials, particularly utilities and to a lesser extent groceries,” the NAB said.

“Consumers cutting back on non-essentials still out-weighed those who spent more, but the number that cut back in Q2 2017 fell in all spending categories, especially eating out, personal goods, travel and home improvements.”

Still, as this final chart shows, spending patterns remain skewed towards paying more for essential goods and services — particularly utilities — while households continue to cutback on discretionary items.

Source: NAB

And this is the June quarter survey, coming ahead of a hefty increase in gas and electricity prices which kicked in for many Australians at the start of the September quarter.

That’s something that will be worthwhile monitoring in the months ahead as quarterly utility bills start to hit the inboxes and mail boxes of Australian households.

NOW READ: This chart shows why higher electricity prices present a threat to Australian retailers

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