The ANZ-Roy Morgan Consumer Confidence Index dropped 1.6 points to 83.9, marking its lowest point in nine weeks. Meanwhile, the Westpac-Melbourne Institute Index fell 2% to 92.8 compared to November, reflecting fading optimism about the economy.
The declines follow the end of the Black Friday and Cyber Monday sales period, suggesting that stronger November spending may have come at the expense of December momentum.
The biggest hit to confidence came from a sharp drop in consumers’ willingness to make major purchases.
The ANZ-Roy Morgan survey reported a 5-point decline in the "time to buy a major household item" measure, its lowest level since early November. Similarly, Westpac’s measure showed a 6% decline, reversing gains seen in recent months.
“The decline in confidence was driven by a 7.9-point fall in the ‘time to buy a major household item’ measure...,” ANZ economist Madeline Dunk (pictured above left) said. “This may suggest anecdotal reports of stronger November spending reflected a bring-forward in end-of-year spending.”
Matthew Hassan (pictured above right), head of Australian macro-forecasting at Westpac, also commented on the results.
“Consumers continue to report solid improvements in ‘current conditions,’ but the latest month has seen this more than offset by a loss of confidence around the outlook, particularly for the economy,” Hassan said.
“The ‘time to buy a major household item’ sub-index fell sharply, reflecting a reversal of the spending lift seen during November’s sales events.”
Short- and medium-term confidence in the economy also weakened.
The ANZ-Roy Morgan Index revealed only 10% of Australians expect “good times” for the economy in the next 12 months, while 30% anticipate “bad times.” The longer-term view was similarly subdued, with 19% predicting negative conditions over five years.
The Westpac-Melbourne Institute Index echoed these concerns, with the “economic outlook, next 12 months” sub-index dropping 9.6%, while expectations for the next five years fell 7.9%.
Hassan linked the pessimism to slowing GDP growth and global uncertainty, saying, “The September national accounts revealed private demand stalled, which likely weighed on expectations for the year ahead.”
Despite ongoing economic challenges, assessments of personal finances remained relatively steady. Westpac noted a 6.9% rise in the “family finances vs a year ago” sub-index, driven by rising household wealth and fiscal support measures.
However, the ANZ-Roy Morgan survey highlighted that only 21% of respondents felt “better off” financially compared to last year, while 49% reported being “worse off.”
With consumer sentiment faltering, attention now turns to interest rates. Both surveys indicated ongoing caution among Australians about future monetary policy.
Westpac anticipates the Reserve Bank (RBA) will leave rates unchanged at its February meeting but expects rate cuts to commence by May.
As economic uncertainty persists and buying confidence remains subdued, consumers are likely to tread carefully into 2025, awaiting further signs of stability in the economy.
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