Consumer stress is rising again with sentiment fragile as consumers struggle with a lack of clarity over the path ahead, according to NAB.
The NAB Consumer Sentiment Survey for Q2 2024 highlighted that cost of living remains the key worry, but job security is adding most to the uplift in concern.
The share of consumers reporting higher prices eased a little further, with groceries, utilities, transport, and eating out top of mind for most Australians.
“Consumer stress remains well above the same time last year but does not suggest anything like the calamity more traditional confidence measures are indicating,” said Dean Pearson and Robert De Iure (pictured above, left to right), head and director, respectively, of behavioural and industry economics at NAB.
“One key reason consumer spending has not collapsed has been employment, providing an offset missed in most consumer ‘confidence’ measures.”
Consumers are continuing to adjust to these recurring challenges by taking greater control of household budgets, cutting spending in most areas.
The top four areas – eating out, treats, entertainment, and car travel – are saving consumers on average $320 a month or $3,840 a year if continued.
Six in 10 used cutbacks for day-to-day living expenses, four in 10 topped up savings or offset accounts, and one in five paid down their mortgage or other debt.
“High living costs continue to drive a range of meaningful changes in behaviour as consumers continue their search for ways to reduce stress,” Pearson and De Iure said. “Consumers are becoming more knowledgeable about price setting and promotion cycles and are buying from multiple stores to get the best deals.”
Consumer expectations for making major household purchases in the next 12 months were also more negative in Q2 compared to Q1.
Intentions were most conservative for major household items, followed by investment properties, other investments, and cars.
The NAB Consumer Stress Index resumed its upward trend in the June quarter, rising to 58.9 points in Q2 2024, following a modest decline in Q1.
Consumer stress remains well above the same time last year but does not suggest anything like the calamity more traditional confidence measures are indicating.
Job security concerns, while still low, are clearly rising and added most to the uplift in overall consumer stress.
By state, overall stress rose sharply in Tasmania and was highest in the country by some margin.
Stress remained elevated and was somewhat higher in Victoria and NSW/ACT than in other parts of the country.
It was lowest in South Australia/Northern Territory, the only region to report lower stress over the quarter.
Consumer stress levels increased more for women than men, widening the stress gap.
Women report much greater concern related to cost of living and retirement funding, and also somewhat higher job stress.
Stress levels also rose and remained highest in the 30-49 age group, reporting the highest stress for all index measures except government policies, where the over-65s reported the highest stress.
Australians continue to make deliberate and considered spending changes in response to cost of living pressures, NAB found.
The majority of Australians do not expect any respite in the short term, with many becoming resigned to an extended period of higher prices. This aligns with consumer spending on pets, which has been growing steadily, including pet insurance and premium products.
Discounters continue to be viewed most favourably, with eight in ten consumers identifying price as the factor they value most.
Consumer satisfaction was highest for discount department stores and discount supermarkets.
Major supermarkets and airlines followed, with major airlines showing a rise in satisfaction.
The NAB Consumer Sentiment Survey Q2 2024 provides a nuanced view of consumer sentiment and stress. While rising stress and economic pressures are evident, consumers are actively adjusting their behaviors to manage their finances and maintain stability.
“Introducing AI into the planning system is about reducing the administrative workload of planners so that they can get on with their main job of planning,” Pearson and De Iure said. “It also helps applicants as it reduces delays by making sure all the required information is provided without repeated requests. This will free up their time and help build more homes faster.”
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