ANZ-RM consumer confidence slips further

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By Leith van Onselen

The ANZ-Roy Morgan Research (RMR) consumer confidence index fell for the second consecutive week, down by 0.8 points (-0.7%) in the week ended 1 February to 112.4, to be tracking just below the long-run average (see next chart).

ScreenHunter_5872 Feb. 03 10.40

According to ANZ chief economist, Warren Hogan, “the response of confidence to rate cuts is now the weakest of the last five easing cycles with concerns around the federal budget, the economic outlook, and job security weighing on sentiment in 2014’’ (see next chart).

ScreenHunter_5874 Feb. 03 10.51
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Nevertheless, Hogan is still calling for rate cuts:

‘‘However, the initial response of confidence to rate cuts was closer to normal, with the added cash flow from lower rates and higher house prices providing a moderate boost to sentiment. This suggests that further rate cuts could provide some boost to confidence in coming months.”

The below chart plots the most recent Westpac-Melbourne Institute Consumer Sentiment index against the latest ANZ-RM Consumer Confidence index. Note the historically large divergence persists between the two measures, with Westpac reporting that pessimists continue to easily outweigh optimists:

ScreenHunter_5873 Feb. 03 10.41
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It’s worth also noting that consumer confidence is down 3%/10% from the same time last year according to ANZ-RM and Westpac.

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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.