ANZ-Roy Morgan Consumer Confidence declined 1.7% to 116.8 this week, only partially offsetting the rise the previous week.
Despite the turmoil in global financial markets – driven by the surprise result in the UK referendum – households remain optimistic about their finances and the economic outlook.
Last week’s easing in confidence was largely driven by a deterioration in consumers’ views towards the economic outlook.
The indicator ‘economic conditions in the next 12 months’ dropped a sharp 9%, while views towards ‘economic conditions in the next 5 years’ eased only marginally, down 0.9%.
Consumers remain relatively upbeat about their own finances.
The indicator on ‘finances compared to a year ago’ declined 2.3%, only partially unwinding the spike over the previous week; while views’ towards ‘finances in the next 12 months’ actually rose 2.7%.
It will be interesting to see what these figures will reflect next week after the Federal Election.
ANZ Head of Australian Economics Felicity Emmett commented:
“The turmoil in financial markets and concerns over the global economic outlook – spurred by the UK’s decision to leave the EU – have not (at least not yet) significantly affected Australian consumers. Confidence eased only marginally last week and remains close to a multi-year high.
“The strength in confidence reflects the solid momentum in Australia’s economy. The improvement in the labour market is likely to be a key factor behind the recent improvement in confidence, in addition to low interest rates and the ongoing strength in the housing market which are supporting households’ healthy assessment of their own finances.
“That said, as a small open economy Australia remains vulnerable to the fortunes of the global economy. Global volatility is the biggest driver of local uncertainty, and with our measure of uncertainty picking up sharply recently we will be closely monitoring further developments in confidence.”