The ANZ-Roy Morgan Research (RMR) consumer confidence index fell by 1.8 points in the week ended 16 November to 113.0, to be just below its long-run average reading of 113.2 (see next chart).
ANZ chief economist, Warren Hogan, finally appears to have grasped the new normal facing the Australian economy, noting:
“The loss of momentum this year may result from sustained weakness in wages growth which may be leaving households in doubt about their capacity to absorb financial shocks and increasing their sensitivity to negative economic news”.
Nevertheless, Hogan is still tipping “a modest strengthening in confidence and spending into 2015” on the back of a lower AUD, higher house prices, and an improving labour market. Clearly, Hogan does not see the huge upcoming drop in mining-related capex, the huge terms of trade shock nor probable macroprudential tightening.
The below chart plots the most recent Westpac-Melbourne Institute Consumer Sentiment index against the ANZ-RM Consumer Confidence index, which continues to show significant divergence recently, with Westpac’s still in the gutter and pessimists outweighing optimists:
