Australia’s consumer confidence falls slightly on deterioration in households’ view of finances

Australian consumer sentiment declined a bit in the week ended 28 November. The fall was mainly due to decline in consumers’ view of their finances. The ANZ Roy Morgan Australian consumer confidence fell 0.1 percent in the last week. However, a rebound in consumers’ view of the economic outlook provided with some offset.

Consumers’ view of their finances dropped 1.5 percent in the week ended 28 November as compared to a year ago. This greatly reversed the rise seen in the prior week. In the meantime, households’ view of their future finances fell 0.9 percent.

On the other hand, consumers’ views on economic conditions over the next 12 months rose 0.7 percent after declining sharply in the prior week. Meanwhile, consumers’ view on the economic outlook in the coming five years rebounded strongly by 3.1 percent.

Consumers’ views about whether now is a good time to purchase a household item fell for the third straight week, falling 1.2 percent in the week ended 28 November. Meanwhile, the four-week moving average of inflation expectations rose to 4 percent last week from 3.9 percent in the prior week.

ANZ head of Australian economics Felicity Emmett stated that the consumer confidence in Australia has come off the highs seen in August. This probably shows consumers’ worries in the recent loss of momentum in labor markets, with the rate of employment growth decelerating, and persistently low wage growth. However, sentiment continues to be well above its long-run average.

“In the lead-up to the Christmas season, we will be watching consumer confidence as a key gauge for the outlook on spending. After an earlier soft patch, momentum in retail sales has picked up over the past two months, and with confidence still elevated we expect this week’s retail data to show another solid rise. Whether that momentum can be sustained, will likely depend on developments in the labour market”, added Felicity Emmett.

At 05:00 GMT the FxWirePro's Hourly Strength Index of Australian Dollar was highly bullish at 126.078, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -110.982. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex