Already-low business and consumer confidence expected to weaken
NAB group chief economist Alan Oster noted that while business conditions remain above average due to a spike earlier in the year, forward-looking indicators suggest further weakness – indicating a potential drop below average levels.
“Of particular note has been the weakness in retail, which continues to report deteriorating conditions,” Oster said.
“This trend is in line with other consumer side indicators such as retail sales and consumer confidence in the December quarter.”
According to NAB’s Consumer Behaviour Survey, consumer anxiety hit a three-year peak of 62 points in Q4 FY18, reflecting slow income growth, high debt levels and weak household wealth growth.
Almost four in 10 Australians said they had experienced some form of financial hardship in Q4 – the highest level in 2 years – against the backdrop of increased cost of living and decreased disposable income.
The most common form of financial hardship recorded was the inability to pay bills, with utility bills impacting the financial position of almost half of surveyed households in hardship.
This has had an impact on consumer spending, with a large number of consumers saying they had cut back on travel, eating out, charitable donations, entertainment and home improvements.
This decreased sentiment was borne out through the lacklustre retail trading figures over December, as reported by the Australian Bureau of Statistics. Sales grew only 0.4 per cent on a month-by-month basis from November, and 3 per cent from December 2017.
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