The ANZ-Roy Morgan Research consumer confidence index retraced by another 1.0 points to 112.2 in the week ended 24 January, and is now tracking just below the long-term average (see next chart).
The fall in confidence was driven mostly by concerns surrounding the Australian economy, augmented by the instability in financial markets.
In particular, the sub-index tracking views about the economic outlook has fallen by 13.5% since early-December, whereas the sub-index tracking whether now was a good time to buy a major household item has fallen by 7.9% over the past three weeks.
Commenting on the result, ANZ chief economist, Warren Hogan, noted:
“Australians’ perceptions of the economic environment continue to be highly sensitive to bad news on the global economy and markets…
“The recent financial volatility has only made matters worse”…
The below chart plotting the most recent Westpac-Melbourne Institute Consumer Sentiment index against the latest ANZ-RM Consumer Confidence index, with both now below their long-run average levels:
Our view remains that when the housing market starts correcting later this year, coinciding with the ongoing slump in commodity prices and mining investment, as well as the closure of the car industry from October 2016, then consumer confidence (and the economy) will take a haircut.
