The ANZ-Roy Morgan Research consumer confidence index retraced by another 1.0 points to 111.2 in the week ended 31 January – the 4th consecutive weekly fall – with the index now tracking below the long-term average (see next chart).
It is the first negative start to the year since 2008.
The fall in confidence was driven mostly by a decline in consumers’ views towards their personal finances, with the sub-index tracking respondents’ financial situation compared to a year ago falling 2.9%, and respondent’s views of their finances in the next 12 months falling by 2.3%. According to ANZ, these measures are most correlated with household spending.
Commenting on the result, ANZ chief economist Warren Hogan pinned the blame on losses on financial markets as well as ongoing concerns about global growth:
“The weakness in confidence highlights the powerful links between international instability and the domestic economy”…
The index has also given back most of its gains after Malcolm Turnbull rose to Prime Minister:
“Confidence is now below the long-run average level and has reversed much of the `Turnbull rally’ from last year”…
The below chart plots 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:
Just wait till the Budget is handed down in May and the housing market starts correcting in the second half. I am expecting confidence to take a big hit.
