Australian weekly consumer confidence falls sharply, unwinding gains over last two weeks

the ANZ-Roy Morgan Australian Consumer Confidence fell a sharp 4.0 percent last week, partially unwinding the gains over the previous two weeks. Though four out of five sub-indices posted declines, the fall in confidence was driven primarily by a sharp reversal of sentiment around economic conditions.

In contrast to these declines, households’ views towards current financial conditions improved 2.8 percent, more than reversing the 1.2 percent fall in the previous week. Meanwhile, views towards future financial conditions fell 2.3 percent, its third consecutive fall.

Consumers’ views towards both current and future economic conditions eased considerably last week, largely unwinding the previous week’s gains. Sentiment around current and future conditions fell 10.7 percent and 7.3 percent respectively.

The ‘time to buy a major household item’ fell a 4.6 percent last week. Despite trending lower recently, this sub-index remains well above its long term average. Inflation expectations edged up to 4.4 percent on a four-week moving average basis, with the weekly value coming in at 4.5 percent.

"Households continue to face a number of headwinds - subdued wage growth, slower growth in house prices and high household indebtedness, which will likely cap the rise in sentiment. In addition, higher energy prices will weigh on households’ disposable incomes. As such, we remain cautious about the outlook for consumer spending despite the solid Q2 retail sales outcome," said David Plank, Head of Australian Economics, ANZ Research.

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