ANZ-Roy Morgan Australian consumer sentiment drops, unwinding earlier gains

ANZ-Roy Morgan Australian consumer confidence dropped in the week ending 18 September, uncoiling certain of the earlier week’s gain. Consumer sentiment fell 2.2 percent. The sell-off in financial markets last week had raised fears of a sharper correction throughout bonds and equities. This has most likely driven the decline in sentiment, according to ANZ.

Financial market weakness seems to have trumped the news of a decline in the jobless rate to 5.6 percent, a three-year low. The softness in consumer confidence was widespread. Consumers’ view towards their future and current finances both dropped 1.8 percent.

Consumers’ views regarding the outlook of the economy were also subdued. Views of the 12-month economic outlook fell 1.1 percent, whereas views of the five-year economic outlook dropped 1.4 percent. Households’ views on whether now is a good time to purchase a household item fell sharply by 4.6 percent.

“Consumer confidence dipped 2.2 percent last week although it remains high by historical standards. Last week’s sell-off in financial markets – which saw the ASX index suffer heavy losses early in the week – was likely the main driver of the decline in confidence”, said ANZ head of Australian economics Felicity Emmett.

Equity markets have now recovered from the previous week’s low. Anyway, consumers are expected to turn their focus back to domestic fundamentals, noted Emmet. Low interest rates, strength in the housing market and a rebounding labor market are all expected to continue underpinning sentiment in the near term, added Emmett.