Consumer confidence fell sharply last week, with the headline index dropping to its lowest level since May, new research has found.
The ANZ-Roy Morgan consumer confidence index decreased by 4.4 per cent in the week ending 11 December.
The sharpest declines were recorded in views on ‘economic conditions over the next 12 months’ and ‘now is a good time to buy a household item’.
Households’ views towards their future finances fell by 2.1 per cent, while views towards finances compared to a year ago edged down by 0.7 per cent. Both of these sub-indices remain above their long-run averages.
Views of economic conditions over the next 12 months dropped notably by 11.7 per cent, bringing the index to its lowest level since February this year. Meanwhile, household views of the economic outlook in the next five years only fell by 1.7 per cent.
ANZ senior economist Jo Masters said that the sharp fall in consumer confidence is “not surprising” following a “shockingly weak” Q3 GDP result.
“We expect the weakness in Q3 economic growth to be temporary,” Ms Masters said. “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.”
“Looking forward, the labour market report on Thursday has the potential to impact consumer confidence this week. We are expecting solid employment growth in November, but confidence is vulnerable to a weaker than expected report.”
[Related: GDP result ‘shockingly weak’: ANZ]