• Consumer confidence fell 2.8% last week, fully reversing the bounce in the previous week. Looking through the weekly volatility, confidence has been trending lower since late last year and remains below long-run average levels.
• The deterioration last week was fairly broad-based, with particular weakness in confidence in current conditions. Views on both household finances compared to a year ago (-4.1%) and time to buy a major household item (-4.6%) declined.
• The only subindex to improve was expectations of the economic outlook in five years (+0.7%). However, levels of this subindex remain subdued (Figure 3).
ANZ CHIEF ECONOMIST WARREN HOGAN COMMENTED:
“Compared to last year, confidence is behaving differently prior to the release of the Commonwealth Budget. While confidence fell sharply in the weeks ahead of last year’s Budget, this year we are seeing a more modest decline. This may reflect that, while negative news around a likely deterioration in the fiscal trajectory is hurting confidence, the impact is reduced when it is not reinforced by tightening measures aimed at the household sector. While we could see further weakness in sentiment in coming weeks, the government’s intention to make this a ‘dull’ budget suggests any fall in confidence is unlikely to be as severe as in 2014.”
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
