The ANZ-Roy Morgan Research consumer confidence index dipped slightly in the week ended 9 August, falling 0.4 points to 112.5 to be tracking close to the long-run average of around 113 points (see next chart).
The slight fall in confidence was driven by concerns about the economic outlook – both next year (-1.5%) and over the next five years (-5.3%).
ANZ chief economist, Warren Hogan, also warned that the recent boost the confidence was driven by temporary factors, and is unlikely to last as the housing bubble unwinds:
“The Australian consumer remains highly vulnerable to a negative economic or financial shock.
The outlook for consumer confidence remains key to a sustainable uplift in consumer spending. While the bounce in June retail sales was encouraging, it reflects a strong housing market and partial boost from the small business package in the Commonwealth Budget. The boost from the Budget is likely to be temporary and will dissipate in the coming months. In addition, housing will be less stimulative to retail sales into 2016 as higher interest rates for investors and other policies aimed at limiting investor housing lending growth slow house price growth (and thereby lessen the ‘wealth effect’ on retail). This means that it will be essential for other drivers of confidence and spending – namely jobs and wages – to lift as housing tails off”.
The below chart plots the most recent Westpac-Melbourne Institute Consumer Sentiment index against the latest ANZ-RM Consumer Confidence index:
Both remain fairly subdued.
