Australia consumer confidence plunges to lowest since May on pessimism over future economic conditions

Consumer confidence in Australia plunged to its lowest level since May this year, following pessimism over future economic conditions.

Consumer confidence fell a sharp 4.4 percent in the week ending 11 December. The headline index is now at its lowest level since May. The details were negative with views on 'economic conditions over the next 12 months' and 'now is a good time to buy a household item' showing the sharpest declines.

Households’ views towards their finances compared to a year ago edged down 0.7 percent, while households' views towards their future finances slipped 2.1 percent. Both sub-indices remain well above their long run averages.

In addition, households’ views of economic conditions over the next 12 months plummeted 11.7 percent, bringing the index to its lowest level since February. Household views of the economic outlook in the next five years fell a more modest 1.7 percent.

Moreover, household views on whether 'now is a good time to buy a household item' fell a sharp 6.2 percent this week, bringing it to the lowest level since late January.

"We expect the weakness in Q3 economic growth to be temporary. The recent pickup in retail sales, combined with still-elevated confidence around future finances, suggests consumer spending will likely improve in Q4. Moreover, higher commodity prices should support profits, and non-mining investment in NSW and Victoria is strengthening," said Jo Masters, Senior Economist, ANZ.

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