I keep a careful eye on consumer confidence because it's a good indication of what's ahead, not just for our property markets but for the economy in general.
And not surprisingly, ANZ-Roy Morgan Consumer Confidence dropped 4.5pts to 93.0 this week – and is now at its lowest for over a month since May 23/24, 2020 (92.7).
Of course, consumer confidence is a good indicator of the confluence of a whole range of economic conditions including job and financial security, and is clearly influenced by the messages the media is feeding them.
And the way people feel about their future will determine how much they're prepared to spend not just on big items like real estate and other big-ticket items, but also on the day-to-day living.
ANZ Senior Economist, Catherine Birch, commented:
"The surge in COVID-19 cases in Victoria has dented consumer confidence, which dropped 4.6% last week.
This was the largest fall since late-March, when national new daily cases peaked.
Confidence in ‘current economic conditions’ fell sharply, suggesting that households are worried about the prospect of a return to tighter lockdowns and the impact of a second wave on the economy.
Confidence around ‘financial conditions’ fell too and we are already seeing Victorians pull back on spending in the latest ANZ data.
Unfortunately, new daily cases in Victoria jumped to 75 on Monday, the state’s fourth-highest daily total since the pandemic began.
This a worrying sign for confidence and a setback for the recovery."
Consumer Confidence is now 25.9pts lower than a year ago on the comparable weekend of June 29/30, 2019 (118.9) and 2.1pts below the 2020 weekly average of 95.1.
There were small declines across all five questions but driving the fall was a decline in confidence about the Australian economy over the next year and next five years.
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Current financial conditions
- Now 21% (down 2ppts) of Australians say their families are ‘better off’ financially than this time last year (the lowest figure for this indicator for over a month since May 9/10, 2020) and 35% (down 1ppt) say their families are ‘worse off’ financially.
Future financial conditions
- In addition 34% (down 1ppt) of Australians expect their family to be ‘better off’ financially this time next year (the lowest figure for this indicator for over two months since April 25/26, 2020) compared to 19% (up 1ppt) that expect to be ‘worse off’ financially.
Current economic conditions
- However just 7% (down 3ppts) expect ‘good times’ for the Australian economy over the next 12 months while 45% (up 5ppts), expect ‘bad times’.
Future financial conditions
- And in the longer term, 19% (down 3ppts) of Australians are expecting ‘good times’ for the Australian economy over the next five years compared to 19% (up 3ppts) expecting ‘bad times’.
Time to buy a major household item
- Meanwhile a decreasing number of Australians, 36% (down 2ppts), say now is a ‘good time to buy’ major household items, while 34% (up 3ppts), say now is a ‘bad time to buy’.
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