Conditions weigh on consumer confidence

The ANZ-Roy Morgan Consumer Confidence index dipped again last week, falling 1.1 per cent. The weakness was predominantly due to the economic conditions component of the index.

Current economic conditions fell by 2.6 per cent, while future economic conditions were more downbeat, falling 4.9 per cent. Both these subindices are near their multi-year lows.

In contrast, financial conditions were upbeat, with current financial conditions gaining 0.3 per cent and future financial conditions gaining 0.2 per cent.

The ‘Time to buy a household item’ subindice gained 0.4 per cent after falling 3.9 per cent in the previous reading. The four-week moving average of inflation expectations declined by 0.1 percentage points to 3.9 per cent as the weekly reading fell to 3.8 per cent, its lowest level since the end of June.

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"Confidence faltered again due to weakness in the two economic conditions subindices," ANZ Head of Australian Economics David Plank said. 

"Continued weakness in these subindices has caused poor performance of the index for some time. Labour market data last week revealed the job market weakened last month, which is probably the reason why the economic conditions subindices have been down for the last few weeks."

"Confirmation wages are still subdued may also have made households apprehensive about the economic outlook, even if it doesn’t seem to be impacting them directly viafinancial conditions. Renewed weakness in the weekly reading of inflation expectations will be a concern for the Reserve Bank of Australia."

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