Australia's consumer confidence just tanked on Greece

Photo: Bryn Lennon/Getty Images

The ANZ-Roy Morgan weekly consumer confidence index has just been released and its a shocker. Consumer confidence dropped an incredible 4.6% last week. That reverses most of the gains in confidence over the past couple of months since the Federal budget.

According to the ANZ, Greece was a key contributor to the drop in confidence:

“News around the Greek economy appear to have spurred concerns about its impact on the global economy and hence Australia. This was reflected in consumers’ view towards the economy, with confidence in the economic outlook over the next year (-8.2%) and next five years (-2.9%) both falling. Households’ views on ‘time to buy a major household item’ also fell significantly (-8.1%), reversing the gains made in the previous five weeks.”

Chief economist Warren Hogan said: “Australians appear acutely aware of the threats posed to economic stability by both the Greek crisis and China’s equity market collapse. An almost 5% decline in confidence in a single week is unusual and should be treated seriously, especially as it reverses a rising trend that has been in place for the last two months.”

That’s not good news for the economy or consumption.

Hogan added that, “while most of the decline in confidence in the past week is likely the result of international factors, it nevertheless reveals the underlying fragility in Australian household perceptions of the economic environment. Ongoing weakness in wage growth and recent soft retail sales data highlight the cautious approach to financial matters on the part of most Australians at present.”

He said the only real bright spot in the economy is housing. But even that is showing signs of cracking with “constant speculation about a housing bubble may actually be working to unnerve consumers.”

The RBA is unlikely to cut today. But this release just brought another cut closer to reality.

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