Anxiety levels for Australian households slid in the final three months of the year, buoyed by signs of improvement in the labour market and non-mining sector of the economy.
That’s the finding of the NAB’s Consumer Anxiety Index released earlier today which declined 1.4 points to 61.1 points, taking the index below its long-term average of 61.9 points.
A lower reading for the index indicates lower anxiety levels.
According to the report, anxiety levels were reduced by diminished concerns relating to job security, with around two-thirds of all Australian consumers rating “very low” or “low” anxiety over their job security.
Continuing the recent trend, concerns over the cost of living was the biggest contributor to overall consumer anxiety, but less so than what was seen in the September quarter.
Anxiety related to government was the second biggest contributor to anxiety levels, although it fell significantly during the quarter, in line with alternate consumer sentiment gauges that rose strongly in the wake of Malcolm Turnbull replacing Tony Abbott as Australian PM.
Here’s a chart from the NAB report that reveals the recent trend in anxiety levels towards job security, health, retirement, cost of living and government policy.
Despite lower levels of anxiety and solid improvement in the labour market, there was little sign of consumers ditching saving in favour of increased spending.
“Lower anxiety has yet to translate into significantly stronger spending behaviours, with paying down debt still the main priority for consumers,” said the NAB. “Financing retirement, providing for the family’s future and health expenses continue to weigh on the minds of consumers”.
The chart below reveals that in terms of consumer spending patterns, purchases remain skewed towards essential items and debt reduction rather than non-essentials.
Although largely unchanged from the prior quarter, spending on discretionary items was notably stronger than the levels of a year ago, suggesting to NAB chief economist Alan Oster that “this bodes well for a stronger Christmas trading period”.
Here’s the anxiety levels expressed by survey respondents, breaking it down by location, salary, age, education, among other. Those indicated in red reflect the highest levels of anxiety in each category.