The ANZ-Roy Morgan Research consumer confidence index retraced by another 1.7 points to 112.8 in the week ended 29 November, the third consecutive weekly decline after hitting a 22 month high of 116.6 (see next chart).
Consumer confidence is now tracking in line with the long run average.
The fall in sentiment was driven by reduced confidence in the economic outlook, with the sub index tracking economic conditions in the next 5 years falling 3%, taking its cumulative 3-week decline to 7.3%, and the sub index tracking economic conditions over the next 12 months falling by 3.4%.
ANZ chief economist, Warren Hogan, suggested that the confidence sugar hit from Malcolm Turnbull’s rise to Prime Minister might now be over:
Confidence has fallen for three consecutive weeks now, which may be an early sign that the honeymoon period for the Turnbull government is over. This turnaround in confidence has been mainly driven by a deterioration in consumers’ views towards the economic outlook.
Last week’s soft capex report highlights the challenges facing the non-mining economy. With news flow continuing to focus on the mixed conditions in the economy, it will be difficult to sustainably lift consumers’ views towards the economic outlook.
Ultimately, the labour market will continue to be a key factor driving both confidence and the RBA rates decision. As such, next week’s job advertisements will provide more indication on this front.
Just wait till the housing market starts correcting next year, which will of course coincide with the ongoing slump in commodity prices and mining investment, as well as the closure of the car industry. Consumer confidence will shit itself.
Regardless, the below chart plotting the most recent Westpac-Melbourne Institute Consumer Sentiment index against the latest ANZ-RM Consumer Confidence index shows that confidence levels are about “average” at present:
