ANZ-RM consumer confidence also fails to bounce

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By Leith van Onselen

When consumer sentiment tanked after the Federal Budget, I along with many other analysts believed that the impact would be largely temporary and would swiftly recover most of the lost ground once the “sticker shock” from the Budget wore off.

Today’s release of the Westpac-Melbourne Institute’s Consumer Sentiment index for June put paid to that view, with the index recording only a 0.2% monthly increase – a negligible recovery after May’s 6.8% post-Budget slump.

Now, ANZ-Roy Morgan Research (RMR) has released its weekly consumer confidence index, which has also registered a minimal bounce, with the index flat over the week and recovering only 2.9% from its post-Budget trough (see next chart).

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Importantly, the ANZ-RM index remains 11% below its pre-Budget level and is well below its long-term average reading of 113.1.

The below chart, which plots the Westpac-Melbourne Institute’s Consumer Sentiment index against the ANZ-RM Consumer Confidence index, highlights the mood of the Australian consumer more clearly:

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Clearly, both indices warrant close monitoring in the months ahead. For if they fail to bounce back, then it could have widespread negative impacts on the housing and retail sectors, and in the process thwart the RBA’s plans to rebalance the Australian economy away from mining.

I’ll cover this issue in greater detail tomorrow morning.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.