Confidence consolidates

Consumer confidence fell by 1.1 per cent last week, with the decline following the prior week’s 4 per cent gain. The performance of the sub-indices was mixed, with financial conditions up and the others down.

Current finances were up by 3.7 per cent for the week, while future finances gained 1.3 per cent.

In contrast, the economic conditions sub-indices were down; with current economic conditions falling 3.6 per cent and future economic conditions losing 1.7 per cent. The decline in these indices was not that disappointing when compared to the gains of 13.3 per cent and 7 per cent respectively in the previous reading.

The ‘Time to buy a major household item’ index was down by 4.6 per cent. The four-week moving average for inflation expectations was up 0.1 percentage point to 4 per cent.

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“Confidence fell 1.1 per cent, despite the Reserve Bank of Australia’s second rate cut. The passage of the tax cuts has also not been an immediate boost to sentiment," ANZ Head of Australian Economics David Plank said.

"We need to put this in context, however. Consumer confidence rose sharply in the prior week and is above average, so some consolidation is not completely unexpected."

"Interestingly, confidence also fell immediately following the June RBA rate cut, suggesting the immediate take-away from monetary easing is not necessarily positive."

"The mixed nature of last week’s data, with another trade surplus but soft retail sales, may also have contributed.”

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