I keep a track of the trends in consumer confidence as the correlate to peoples “appetite” to make decisions to buy new homes or investment property.
This week ANZ-Roy Morgan Consumer Confidence fell 0.4% to 112.5 this week after gaining 5.5% over the previous three weeks.
While the fall this week was modest, the decline is somewhat disappointing given confidence has yet to regain its recent peak reached before China and Greece-related market volatility hit sentiment.
- Households’ views of their current finances declined 2.7% last week, after reaching the highest level since the weekly survey began (in October 2008) in the previous week.
While levels remain encouraging and point to an improvement in spending, we caution that this sub-index has provided an overly optimistic view of spending in recent years (Figure 4).
- Households’ views of economic conditions remains soft.
Expectations of the economic outlook declined over both the next year (-1.5%) and next five years (-5.3%).
ANZ Chief Economist Warren Hogan commented:
“Australians’ view on the economic and financial situation remains highly bifurcated.
Questions relating to the here and now and the household balance sheet are highly favourable.
Sentiment towards the future, particularly the medium to long term outlook for the economy, is extremely weak.
The Australian consumer remains highly vulnerable to a negative economic or financial shock.
The outlook for ANZ-Roy Morgan Consumer Confidence remains key to a sustainable uplift in consumer spending.
While the bounce in June retail sales was encouraging, it reflects a strong housing market and partial boost from the small business package in the Commonwealth Budget.
The boost from the Budget is likely to be temporary and will dissipate in the coming months.
In addition, housing will be less stimulative to retail sales into 2016 as higher interest rates for investors and other policies aimed at limiting investor housing lending growth slow house price growth (and thereby lessen the ‘wealth effect’ on retail).
This means that it will be essential for other drivers of confidence and spending – namely jobs and wages – to lift as housing tails off.”