Australia’s consumer sentiment drops on fall in views of economic outlook

Australia’s consumer sentiment for the week ended 20 November dropped after recording a rise in the previous week. The ANZ-Roy Morgan Australian consumer confidence dropped 2.3 percent. In the previous week it had risen 0.3 percent. The sentiment fell mainly due to a fall in consumers’ views on the economic outlook. On the other hand, consumers views regarding financial conditions have improved, noted ANZ.

Consumers’ views regarding economic conditions over the next 12 months dropped sharply 5.6 percent, while their views on the economic conditions in the next five years fell 7.5 percent. This partly reversed the gain in the past three weeks.

Views of households regarding their finances compared to one year ago rose 2.1 percent in the week ended 20 November following a drop of 0.8 percent in the previous week. In the meantime, consumers’ views about their future finances continued to stay the same after 1.2 percent decline last week. Both sub-indices stayed above their long run average. Consumers’ views on whether ‘now is a good time to buy a household item’ dropped 0.7 percent after declining 1 percent last week, stated ANZ.

According to ANZ Senior Economist Jo Masters, the last week’s labor market data was slightly disappointing and might have weighed on sentiment, particularly on consumers’ views on the Australian economic outlook. The central bank underlined the recent slowdown of labor market momentum, which along with easing business conditions needs a close watch. The decline of the AUD in last week might have also weighed on confidence.

“Stepping back from the recent volatility in the index, consumer confidence remains well above its long run average. This is consistent with an economy growing around trend, a buoyant housing market, and accommodative monetary conditions”, added Jo Masters.

At 05:00 GMT, the FxWirePro's Hourly Strength Index of Australian Dollar was neutral at -16.4071, while, the FxWirePro's Hourly Strength Index of USD was neutral at 27.4778. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex