(Australian Associated Press)
Consumers are feeling less confident as households feel the strain of high debt levels and slow wage growth.
The latest ANZ-Roy Morgan Consumer Confidence Index dropped last week to below its long-term average, with consumers only feeling more positive about future financial conditions, which hit its highest level since April.
Households’ outlook on near and medium term economic conditions worsened for the second consecutive week, as did consumers’ confidence about their current financial situation, although it remained comfortably above its long term average.
ANZ head of Australian economics David Plank said despite there being no clear trend for some months, household conditions remained stretched due to high debt levels and slow wage growth.
“We suspect these will remain constraints on the outlook for households for some time,” he said on Tuesday.
Mr Plank said that in contrast, the outlook for business activity had been increasing in recent months – and would be boosted by an expected upturn in non-mining investments.
“This should support a continued recovery in the labour market,” he said.
Employment data for September is set to be released by the Australian Bureau of Statistics on Thursday but Mr Plank said there could be downside risk with figures due to recent overshooting.
The index showed a fall in consumer confidence of 1.2 per cent to 112.4 for the week to October 15, dragged down by consumer views about their current financial situation.
The “good time to buy a household item” index decreased by 3 per cent.
Households’ outlook on near and medium-term economic conditions declined by 2 per cent and 2.4 per cent respectively, while views about future financial conditions climbed by 2.5 per cent to their highest level since April.
Inflation expectations remained unchanged at 4.5 per cent.