I keep track of consumer confidence because its one of the drivers of our property markets.
This week ANZ-Roy Morgan Australian Consumer Confidence fell a sharp 3.8% to 109.8 – largely offsetting the gains over the previous two weeks.
The weakness was broadly based – with a sizeable decline in households’ perceptions of the economic outlook driving the deterioration in sentiment.
Of course when people don’t feel confident about their economic future, they keep their hands in their pockets rather than buying big ticket items such as new homes or investment properties.
The key facts:
- After two consecutive weeks of improvement, consumers’ views towards current and future economic conditions dipped, down 8.1% and 7.2% respectively. The average of these two measures
- Households’ views towards current financial conditions slipped 0.3% last week. Partially offsetting this weakness, sentiment around future financial conditions rose a solid 3.7%. Looking through the weekly volatility, confidence in overall financial conditions has remained broadly unchanged over the past two months, hovering around its long term average (Figure 3).
- Consistent with the fall in views towards economic conditions, the ‘time to buy a major household item’ index dipped 7.6% last week, down to the lowest level in almost two years.
- Inflation expectations were unchanged at 4.4% on a four-week moving average basis.
Business Confidence Slips Too
Similarly Business Confidence fell 2.6pts (-2.2%) to 114.4 in August, according to the Roy Morgan following extensive discussions about the high cost of energy in Australia.
However, businesses remain largely positive with a majority of businesses expecting to be ‘better off’ financially this time next year (51.7%) and most businesses say now is a good time to invest in growing the business (54.9%).
The fall in Business Confidence was driven by large falls in confidence in several industries including Manufacturing, Electricity, Gas, Water and Personal, repair and other services.
Source: ANZ-Roy Morgan
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