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Consumer confidence crumbles as catastrophic fires continue
The bushfire disaster has taken a toll on consumers’ confidence in the Australian economy as a whole, according to new research.
Consumer confidence crumbles as catastrophic fires continue
The bushfire disaster has taken a toll on consumers’ confidence in the Australian economy as a whole, according to new research.
The latest ANZ-Roy Morgan consumer confidence survey revealed that confidence is at a four-year low despite it being at the start of the year when Aussies are typically more upbeat about their future.
Consistent with this, the weakness in confidence was due to a big drop in the economic outlook. “Current economic conditions” were down by a massive 12.9 per cent, while “future economic conditions” fell 8.1 per cent.
“Current economic conditions are at their lowest level since the global financial crisis, while sentiment towards the future economic outlook is at its lowest level since 1994,” the survey revealed.
David Plank, ANZ head of Australian economics, said, “Against the backdrop of the weekend’s catastrophic bushfires, it is not surprising that consumer confidence declined.
“But the reported decline of 1.7 per cent since the last survey in mid-December understates the weakness when one considers that the New Year usually sees a strong gain in sentiment.”
Despite confidence falling, the index remains above 100 points, indicating consumers are more optimistic than pessimistic.
In contrast, financial conditions gained. “Current finances” rose 4 per cent, while “future finances” were up 0.3 per cent.
“The ‘time to buy a household item’ gained 4.8 per cent, recovering from a fall of 6.4 per cent seen in the last reading of the previous year,” Mr Plank said.
The four-week moving average of “inflation expectations” was stable at 4.0 per cent, though weekly readings saw a sharp fall, which should result in a weaker reading in the coming week.
“This offers the prospect that the impact on overall consumer confidence from the weekend’s terrible events may be relatively short-lived. The policy steps taken by the federal government in recent days could contribute to that outcome. We are mindful, of course, that there is likely still bad news to come about the impact of last weekend’s fires. There is also a lot of hot and dry weather to come before the bushfire season is over,” Mr Plank concluded.
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