The ANZ-Roy Morgan Research (RMR) consumer confidence index fell by 3.5 points (-3.1%) in the week ended 7 December to 110.4, to the lowest level in four months and well below its long-run average reading of 113.2 (see next chart).
According to ANZ, this week’s sharp fall was driven by “a sharp decline in confidence in the economic outlook, likely reflecting the weak GDP data and media focus on the government’s economic management last week”.
At the sub-indices level, the declining confidence was driven by big falls in “confidence in the economic outlook over the next year (-7.8%) and next five years (-8%)”.
Levels of both sub-indices were subdued even before the fall last week, and are likely contributing to the unusual sensitivity of households to negative economic newsflow. This has previously caused three sizeable drops in confidence this year in response to job losses in the aviation and manufacturing industries, Federal budget cuts, and a surge in the unemployment rate (later revised).
The below chart plots the most recent Westpac-Melbourne Institute Consumer Sentiment index against the latest ANZ-RM Consumer Confidence index, with some narrowing in the recent divergence after today’s result, and Westpac’s measure remaining in the gutter with pessimists outweighing optimists:
The release later this month of Westpac’s consumer sentiment index for December should provide a more definitive read on the Australian consumer’s mood in the run-up to Christmas.
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