The ANZ-Roy Morgan Australian consumer confidence results have stalled, falling a sharp 5.7% to 108.5 in the week ending August 10.
The drop shows confidence levels are failing to consolidate recent gains and could reflect last week’s unexpected unemployment rate jump to a 12-year high from 6.0% to 6.4%.
ANZ also said the fall in confidence could also be the result of rising geopolitical tensions in both Iraq and Ukraine as well as last weeks fall in the Australian stock market.
Consumer confidence has been marked with heightened sensitivity since the end of April when it plummeted 15% on the back of negative Federal Budget news.
However it started to regain ground in June and July, showing budget shock was just a temporary condition.
“The fall last week leaves confidence back below its long run average (since 1990) and is a sizeable reaction if related to the disappointing labour market data,” ANZ said.
“Behind the fall last week was weakness in household perceptions about ‘economic conditions in a year’s time’ (-9.1%), ‘economic conditions in five years’ time’ (-8.9%) as well as ‘time to buy a major household item’ (-7.8%).”
ANZ chief economist Warren Hogan said they expect consumer spending growth to “remain moderate this year, before improving next year”.
Hogan said riding house prices and an improving labour market are strong drivers of confidence.
“However, the trajectory of consumer confidence remains key for the recovery in consumer spending and we will closely monitor developments,” he said.
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