Consumer confidence dips in October
Consumer confidence dipped in October as people fret about the future.
The ANZ Roy Morgan consumer confidence index fell to 115.4 in October from 117.6 in September. People's optimism about their present situation lifted slightly to 122.0 from 120.2 but the future conditions index fell to 111.0 from 115.9, the lowest since late 2015.
“Consumers are feeling good about the here and now, but concerns about the future are clearly growing. Consumers haven’t been this pessimistic about their own and their family’s financial outlook one year ahead since mid-2012," said ANZ chief economist Sharon Zollner.
Perceptions regarding the next year’s economic outlook fell 5 points to a net 1 percent expecting conditions to deteriorate versus a net 4 percent expecting an improvement in the prior survey. The five-year outlook fell 4 points to positive 14 percent.
A net 11 percent say they were better off now than a year ago versus a net 12 percent in the prior survey. A net 20 percent expect to be better off financially this time next year, down 7 points.
However, the survey also showed that a net 33 percent say it’s a good time to buy a major household item, bouncing back 4 points from last month.
“A key question is whether this growing concern about the outlook will lead to consumers reining in their spending. However, encouragingly for retailers, the proportion of respondents who think it’s a good time to buy a major household item increased and is at a level consistent with solid growth in spending," Zollner said.
Inflation expectations were a tad higher with prices seen rising at an annual pace of 3.5 percent during the next two years, up from 3.4 percent in October but down from 4 percent in August.
Zollner said ANZ's confidence composite gauge - which combines business expectations and intentions with overall consumer sentiment - suggests a slowing in economic growth by year-end.
"Such a development would not be welcomed by the Reserve Bank, who is struggling to get inflation sustainably up to the inflation midpoint. We continue to see an eventual OCR cut as a very real possibility.”
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