Australian consumer confidence fell again last week, weighed down by uncertainty generated by Australia’s federal election and the outlook for the global economy.
The latest ANZ-Roy Morgan consumer confidence index slid by 0.9% to 115.8, extending the decline over the past two weeks to 2.5%.
Crucially, the index still remains above its long-run average of 112.8.
It is remarkable outcome. Imagine where it’d be without negativity generated by the election and UK Brexit vote.
According to ANZ, the weakness in the survey was concentrated around sentiment towards personal finances.
“Consumers views of their current finances edged 1.6% lower, whereas views towards future finances dipped 5.1%,” said the bank. “Overall, consumers views towards their personal finances remain well above their long-run average.”
Perceptions towards whether now was a good time to buy a major household item also slid, falling 2.5%. While this suggests that household spending may soften in the period ahead, the subindex still sits at elevated level.
Helping to offset that weakness, sentiment towards the economy improved, particularly looking one year ahead.
“After falling sharply last week, households’ view of the 12 month economic outlook bounced 4.7%, while views towards the economic outlook in the next 5 years rose 1.7%,” it said.
In contrast to views on personal finances which remain well above their long-run averages, ANZ note that perceptions towards the economic outlook remain well below average, even with a steady improvement seen since the beginning of the year.
Felicity Emmett, head of Australian economics at ANZ, put the decline in confidence this week almost entirely down to the outcome of the federal election.
“Confidence has edged lower in the past two weeks after reaching a two-and-a-half year high. While the recent turmoil in financial markets has likely played a part, we believe that a larger contributing factor in this week’s fall is likely to have been uncertainty related to the federal election,” she said.
She also suggests that the political wranglings in Canberra in the period ahead will be highly influential on sentiment levels moving forward.
“Over the coming weeks, confidence could be affected if the government fails to secure a majority and a minority government proves difficult to form. This uncertainty around the political outlook will likely remain a key influence on household confidence in the near term,” she says.
After one of the longest election campaigns on record, and having seen confidence levels push higher over that period, the most damaging impact of the campaign may be the actual result itself.