The ANZ-Roy Morgan Research consumer confidence index tanked 5.4% in the week ended 5 July, slumping 6.3 points to 111.0, to be tracking below the long-run average of around 113 points (see next chart).
Commenting on the result, ANZ chief economist, Warren Hogan, blamed the turmoil in Greece and China:
“News around the Greek economy appear to have spurred concerns about its impact on the global economy and hence Australia. This was reflected in consumers’ view towards the economy, with confidence in the economic outlook over the next year (-8.2%) and next five years (-2.9%) both falling. Households’ views on ‘time to buy a major household item’ also fell significantly (-8.1%), reversing the gains made in the previous five weeks”…
“Australians appear acutely aware of the threats posed to economic stability by both the Greek crisis and China’s equity market collapse. An almost 5% decline in confidence in a single week is unusual and should be treated seriously, especially as it reverses a rising trend that has been in place for the last two months.”
And Hogan has clearly reversed track after turning bullish last week:
“…while most of the decline in confidence in the past week is likely the result of international factors, it nevertheless reveals the underlying fragility in Australian household perceptions of the economic environment. Ongoing weakness in wage growth and recent soft retail sales data highlight the cautious approach to financial matters on the part of most Australians at present.”
Hogan’s bullishness was never justified. Iron ore prices will head lower over the second half, draining national income. And Australia still faces large falls in mining capex and the shuttering of the local car industry through 2016 and 2017.
Nevertheless, the below chart plots the most recent Westpac-Melbourne Institute Consumer Sentiment index against the latest ANZ-RM Consumer Confidence index:
Both indices are underwhelming.
