There has been some debate about the influence of external events upon Australian consumer confidence. To my knowledge, nobody as actually tried to measure the effects discretely, but this week’s Roy Morgan Consumer Confidence reading weighs in heavily on the side of deep impact. The number fell 7.5 points to the lows of mid last year:
Consumer Confidence is at 108.2pts (down 7.5pts in a week) according to the Roy Morgan Consumer Confidence Rating conducted last weekend (May 19/20, 2012). Consumer Confidence is now 7.4pts lower than a year ago May 21/22, 2011 (115.6).
The fall in Consumer Confidence has been driven by decreased confidence about all components of the survey, especially confidence about the next year.
Australians have lost confidence over the past week about their personal finances over the next 12 months with 35% (down 3%) saying they expect their family to be ‘better off’ financially while 25% (up 8%) expect to be ‘worse off’ (the highest since July 30/31, 2011.
Australians are also far less confident about Australia’s economy over the next twelve months with 28% (down 5%) of Australians expecting ‘good times’ economically over the next twelve months compared to 36% (up 5%) that expect Australia to have ‘bad times’.
Australians are also less confident about Australia’s economy over the longer term with 32% (down 3%) of Australians expecting Australia to have ‘good times’ economically over the next five years compared to 24% (up 6%) that expect ‘bad times’.
Now 29% (down 1%) of Australians say their family is ‘better off’ financially compared to a year ago while 31% (up 4%) say their family is ‘worse off’ financially.
Now a decreasing majority of Australians 53% (down 2%) say now is a ‘good time to buy’ major household items while 20% of Australians (up 1%) say now is a ‘bad time to buy’ major household items.
The debate around the external effects upon Australians has taken the predictably idiotic course of saying consumers should either not be affected (because we are different) or they are listening too much (because we are different but Anglo-obsessed). To my mind the Roy Morgan figures (as well as other data like the savings rate) show that Australians are listening because they know in their hearts that we are no different at all.
Coming on the back of the terrible April services economy data and the sliding prices in our largest export commodities, this reading tells me we need another rate cut in June. If the data flow continues, it’ll need to be 50bps.
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.
