CANBERRA: Consumer confidence has eased slightly in the past week but views towards the Australian economy’s future remain downbeat. The ANZ-Roy Morgan Consumer Confidence Index fell 0.6% in the past week to 114.1, with negative views towards future economic conditions offset by a 3.3% lift in optimism in the time to buy a major household item index, AAP reported.
Australia & New Zealand Bank senior economist Felicity Emmett said consumer confidence is hovering around its long-term average, buoyed by ongoing strength in the labor market and optimism around current conditions. But, while views towards current economic conditions remained virtually unchanged, up just 0.1%, confidence around future economic conditions had slipped 6.5%, she said, reflecting ongoing concerns around household finances if wage growth remains weak. ‘Though the headline number showed little change last week, there has been significant volatility in responses over the past few weeks, particularly in consumers’ views towards future economic conditions,’ Emmett said in a statement on Tuesday. She said the concerns were likely being exacerbated by the prospect of interest rate rises over the next year or so. “As such, we see a pick-up in wage growth as the key to a sustained recovery in confidence,” she said. Households’ views towards current financial conditions showed little change, up 0.1%, while confidence around future financial conditions slipped 0.8%. Inflation expectations remain steady at 4.4% on a four-week average basis.
Australian households are burdened with very high levels of debt and sluggish income growth which leaves them vulnerable to economic shocks, a top central banker said on Tuesday. Reserve Bank of Australia Assistant Governor Michele Bullock said that high levels of debt meant households would be very sensitive to any rise in official interest rates and the central bank would take this into account when considering monetary policy. The head of the RBA recently noted that the next move in rates was more likely to be up than down and households needed to be aware of the risks. Meanwhile, Treasurer Scott Morrison has revealed Australia’s federal budget is $4.4 billion better off than forecast five months ago. Australia’s final budget deficit for the 2016-17 financial year was $33.2 billion, down more than $4 billion from the $37.6 billion outlined in the May budget. Federal government spending on social services, border control and the National Disability Insurance Scheme has been lower than expected.
