Confidence rises but more feel worse off

Consumer confidence edged higher at the weekend according to an ANZ survey that suggests a slight rise in optimism about the next 12 months but also records more people saying they feel worse off than at this point last year.

The ANZ-Roy Morgan Australian Consumer Confidence index rose 0.6 per cent from the previous week, with respondents’ perception of the economy – including the outlook for the next 12 months – up 0.3 per cent and sentiment about conditions during the next five years down 1.1 per cent.

The weekly measure of consumer mood, which is based on about 1,000 face-to-face interviews conducted on Saturdays and Sundays, also registered a 2.4 per cent fall in how people felt about their own current financial condition compared with a year ago and a 0.4 per cent increase regarding their finances during the next 12 months.

“This measure is still well above average, but is now down close to 10 per cent from its August high,” ANZ head of Australian economics David Plank said.

“If consumers lose confidence in their own finances when they are also worried about the broader economic outlook then there may be a material impact on spending.”

Westpac chief economist Bill Evans recently argued that the recently spate of cash rate cuts by the Reserve Bank of Australia may have sent a negative message to Australian consumers.

“Typically an interest rate cut boosts confidence particularly around consumers’ expectations for and assessments of their own finances,” Evans said.

“Consumers are looking behind the reason for the rate cut and, arguably, the absolute level of rates and getting nervous.”

During 2019, the Reserve Bank of Australia has dropped the official cash rate from 1.5 per cent to 0.75 per cent.

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