Australians are increasingly concerned about the state of
the national economy, with two recent surveys highlighting decreased consumer
sentiment. While there is still a lot to be optimistic about, the latest
Westpac-Melbourne Institute survey showed decreased confidence at the start of
June and the ANZ-Roy Morgan Consumer Confidence Index was flat after recent
advances. A number of factors are responsible for the increasing pessimism felt
in the community, including rising bank interest rates, higher energy costs,
and weaker household incomes.
The Westpac-MI survey records consumer sentiment across a
wide range of subjects, including family finances and wider economic
conditions. Overall consumer sentiment was down 1.8 percent for the month, with
the index dropping 5.8 percent for the year to reach a level 5.3 points below
average. Economic conditions over the next five years were down 8.3 percent for
the month and 6.5 percent for the year, with economic conditions for the next
12 months down 4.8 percent for the month and 6.7 percent for the year. The
survey also shows increased pressure on family finances, which this component
detail down 1.5 percent for the month and 9.9 percent for the year.
According to the
Westpac-MI report: "The index is now back in firmly pessimistic territory
with the June reading the weakest since the RBA’s 2016 rate cuts. Although
confidence is not overly weak it has shown a clear downtrend since mid-2016 ...
The drop in sentiment can be widely attributed to continued weakness in
household incomes, which have barely outpaced inflation over the last four
quarters. Other factors linked to the
drop in sentiment including weak economic growth figures and rising household
costs... Ahead of the release, many commentators feared the economy may have
contracted in the quarter. Recent increases in mortgage interest rates and
electricity costs have likely added to pressures."
Australia's gross domestic product slowed to 0.3 percent in
the March quarter according to data released on June 7, taking annual growth to
just 1.7 percent. This is the weakest pace of growth since the global financial
crisis almost 10 years ago. Concerns about unemployment were also prevalent in
the survey, with 3.5 percent more consumers expecting unemployment to rise over
the next year. While this is still a clear improvement on historical figures,
it does highlight a growing lack of job security on a short-term basis.
The latest ANZ-Roy Morgan Consumer Confidence report was
flat at 112.9 for the week ending June 11, following three consecutive weeks of
rises. According to ANZ's head of Australian economics David Plank, consumer
confidence stalled on the back of weak first quarter growth figures, with
expectations of current economic conditions down 5.2 percent. However, despite
the future economic conditions indicator sliding to its lowest level since
September 2015, consumers were still optimistic about their personal finances,
with ANZ's reading jumping 9.4 percent to its highest level in 14 weeks.
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