Consumer sentiment: The weekly ANZ/Roy Morgan consumer confidence rating fell by 0.2 per cent last week to stand 0.4 per cent lower than a year ago.
What does it all mean?
Despite the latest pullback, consumer confidence remains “OK”. Over the past few months households have been generally upbeat focusing on the improvement in domestic fundamentals. In fact confidence levels have eased from 7-week highs. The mild pullback over the past week was largely due to concerns about the health of our largest trading partner – China.
The sharp slide and volatility in sharemarkets across the globe would not have filtered through to the latest confidence reading. Rather confidence is likely to fall further over the coming week when consumers digest the rout in global sharemarkets. No doubt the next few days of trading on equity markets will be more telling in how consumers react from a confidence perspective.
From a fundamental sense the Australian economy and in particular household finances remain in good shape, however the financial market volatility can have a more profound impact on confidence. The longer that the sell-off on global markets continues, the more impact it will have on the real economy – dampening confidence, curbing spending and overall activity. CommSec expects the Reserve Bank to remain on the interest rate sidelines over the rest of 2015, although the risks lie with a further rate cut rather than a rate hike.
What do the figures show?
Consumer sentiment
The weekly ANZ/Roy Morgan consumer confidence rating fell by 0.2 per cent 113 in the week to August 23. Confidence is down 0.4 per cent over the year but still up on the average of 111.5 since 2014.
Two of the five components of the index rose in the latest week:
– The estimate of family finances compared with a year ago was unchanged at +11;
– The estimate of family finances over the next year was down from +24 to +22;
– Economic conditions over the next 12 months was up from -7 to -6;
– Economic conditions over the next 5 years was down from +8 to +7;
– The measure of whether it was a good time to buy a major household item was up from +30 to +31 points.
What is the importance of the economic data?
The ANZ/Roy Morgan weekly survey of consumer confidence closely tracks the monthly Westpac/Melbourne Institute consumer sentiment index but the former measure is a timelier assessment of consumer attitudes and is now closely tracked by the Reserve Bank.
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