The ANZ-Roy Morgan Research consumer confidence index crashed in the week ended 6 September, slumping by 6.6 points to 106.7 to be tracking well below the long-run average of around 113, and hitting the lowest level since July 2014 (see next chart).
The decline in confidence was broad-based, as outlined below:
- Financial situation compared to a year ago, down 3.5%;
- Financial situation next year, down 5.4%;
- Economic conditions next year, down 6.3%;
- Economic conditions next five years, down 5.2%; and
- Time to buy a major household item, down 8.4%.
According to Felicity Emmett, co-head of Australian economics at ANZ, the sombre national accounts data released last week “rattled” consumers:
“Consumer confidence fell 5.8% and is now sitting at the lowest level since July last year. While confidence held up in the face of financial market volatility recently, data last week showing weaker conditions at home appear to have hit household sentiment. In particular, weak June quarter GDP and an unexpected fall in July retail spending seem to have rattled consumers. The magnitude of the fall in confidence is concerning, being the largest weekly fall we’ve seen since around middle of 2012. This highlights consumers’ fragility in the current economic environment.
Interestingly, views on purchasing a household item have reached the lowest level since May last year, when confidence plunged in response to the 2014-15 Commonwealth Budget. Combined with the drop in households’ view of their own finances as well as slower house price growth, this suggests that the outlook for retail is likely to remain challenging”.
The below chart plots the most recent Westpac-Melbourne Institute Consumer Sentiment index against the latest ANZ-RM Consumer Confidence index:
It will be interesting to watch whether Westpac’s consumer sentiment survey for September follows suit. I suspect Thursday’s labour force report from the ABS could have a significant baring.
