(Australian Associated Press)
Low wage growth, rising household debt and global geopolitical tensions are all weighing on consumer confidence, ANZ says.
The ANZ-Roy Morgan Consumer Confidence Index fell 1.9 per cent to a level of 112.6 points in the week ending April 16, closer to the 100-point level separating optimism and pessimism.
ANZ senior economist Felicity Emmett said the drop in confidence came despite the strong labour market report released last week and ongoing strength in the housing market.
“Rising geopolitical risks, however, have impacted the local share market and are likely feeding through to households concerns about the economic outlook,” she said in a statement.
“Moreover, the RBA’s focus and the associated media spotlight on the exuberance in house prices in Sydney and Melbourne, as well as high levels of household debt, is possibly feeding into concerns about the outlook.”
The main driver of the fall in overall confidence was consumers’ views about the wider economy.
Survey respondents much more downbeat about the wider economic outlook, with their views about economic conditions over the next five years slumping 4.1 per cent and their views of economic conditions over the coming year also falling 1.9 per cent.
Households were more pessimistic about their current finances, with that measure falling 0.7 per cent, however, they were more upbeat about their future finances, with that measure improving by 2.7 per cent.
Consumers said they were 5.1 per cent less likely to buy a household item as well, following five consecutive weekly gains in that measure.
Ms Emmett said the data, along with poor retail spending figures, provided further evidence that low wage growth and rising household debt were crimping household consumption growth.
“In our view, a reassertion of the downward trend in the unemployment rate along with some improvement in wage growth will likely be required to materially lift consumer confidence,” she said.