Consumer confidence in the Australian market has fallen by 2.9 points to 82 this week after nearing the ceiling of a 20-month low last week.
ANZ and Roy Morgan noted that the fall in consumer confidence came a week after the Reserve Bank of Australia decided to leave interest rates unchanged at an equal 13 year high of 4.35 per cent.
The index has now spent a record 87 straight weeks below the mark of 85.
ANZ economist Madeline Dunk said the drop in Australian consumer confidence was broad-based, but noted a particularly large fall in households’ confidence in their current financial conditions. Dunk said the subindex here declined 6.7 points, its largest weekly fall in more than a year.
“Inflation expectations declined 0.3 percent points after the monthly CPI indicator showed that headline inflation fell back within the RBA’s 2-3 per cent target band. At 4.6 per cent, inflation expectations are at their equal lowest since September 2021,” Dunk said.
“There’s also been movement across the housing cohorts, with the four-week moving average of confidence amongst renters back below that of households paying off a mortgage. Those who own their home outright remain the most confident.”
On the flipside, New Zealand consumer confidence has surged by 2.9 points to 95.1 in the month of September, and has been steeply increasing since its recent low of 83.2 in July.
This is despite retail spending in New Zealand continuing to spiral down with a 3.4 per cent fall in September.
According to Roy Morgan, New Zealand’s lift was driven by expectations about the future, rather than views of the here and now.
“Despite the lift in recent months, ANZ-Roy Morgan New Zealand Consumer Confidence remains subdued, as any retailer could tell you,” Roy Morgan reported. “While interest rates are coming down, most mortgage debt is on fixed rates, which means most indebted households will not yet have experienced any meaningful relief.
“Like businesses, households are willing to believe that better times lie ahead, but they remain understandably cautious in the here and now.”
Inside the stats
Back in Australia, despite the fall in consumer confidence in the country, the index is still 3.8 points above the same week a year ago and in line with the 2024 weekly average of 82.1.
The index was down in New South Wales, Queensland and Western Australia, but unchanged in Victoria and South Australia.
Now a fifth of Australians (20 per cent - down 3ppts) say their families are ‘better off’ financially than this time last year compared to 53 per cent (up 5ppts) that say their families are ‘worse off’.
Views on personal finances over the next year are down slightly this week with 32 per cent of respondents (down 2ppts) expecting their family to be ‘better off’ financially this time next year while 31 per cent (unchanged) expect to be ‘worse off’.
Meanwhile, 9 per cent (down 1ppt) expect ‘good times’ for the Australian economy over the next twelve months compared to fewer than a third (31 per cent - unchanged) that expect ‘bad times’.
Net sentiment regarding the Australian economy in the longer term was virtually unchanged this week with 12 per cent (down 1ppt) of Australians expecting ‘good times’ for the economy over the next five years compared to 19 per cent (unchanged) expecting ‘bad times’.
As for buying intentions, 20 per cent of Australians (down 2ppts) say now is a ‘good time to buy’ major household items, compared to 49 per cent (unchanged) that say now is a ‘bad time to buy’ major household items.
As for New Zealand, its consumer confidence level in September is the highest level since January 2022.
The future conditions index made up of forward-looking questions rose another 5 points from 100.5 to 105.6. The current conditions index was flat and is much more subdued at 79.6.
Roy Morgan reported that this strong contrast between the here and now and expectations of the future mirrors the themes evident in its Business Outlook survey last month, and is typical at the start of economic recoveries.
The net perceptions of current personal financial situations rose 2 points to negative 16 per cent with 26 per cent (up 3 per cent points) saying they are 'better off financially' than this time a year ago compared to 41 per cent (unchanged) who say they are 'worse off financially'. Roy Morgan noted this is still very weak, but well off its recent low.
In contrast, a net 25 per cent of New Zealanders expect to be better off this time next year with 46 per cent (up 5 per cent points) saying the expect to be 'better off financially' this time next year compared to only 21 per cent (down 3ppts) that expect to be 'worse off financially', up 8 points.
A net 25 per cent of New Zealanders think it’s a bad time to buy a major household item with 51 per cent (up 1ppt) who say now is a 'bad time to buy major household items' compared to only 25 per cent (down 2ppts) who say it is a 'good time to buy major household items, down a net 2 points and still sending soft signals about retail demand.
Perceptions regarding the economic outlook in 12 months’ time lifted 1 point to negative 17 per cent - which is still well into negative territory according to Roy Morgan, while the 5-year-ahead measure rose 6 points, and further into positive territory, hitting 9 per cent.
House price inflation expectations rose from 2.8 per cent to 3.2 per cent year-on-year; they appear to have troughed in late 2022, Roy Morgan reported. Expectations are strongest in the North Island excluding Wellington.
Two-year-ahead CPI inflation expectations were unchanged at 3.8 per cent. Roy Morgan added that households typically overestimate the rate of inflation.