The ANZ – Roy Morgan Weekly Consumer Confidence index was released Wednesday morning. The report showed that consumer confidence had fallen 2.3 per cent last week, taking it to an eight month low. Retail spending increased to a five month high in February but unemployment remains near 12-year highs. The number of Australian job ads posted had also fallen for the first time in a year. ANZ chief economist Warren Hogan is projecting that consumer confidence is in for a “bumpy” ride in the next year. "The strength in retail sales over January and February is surprising in light of continuing lacklustre consumer confidence," he said. “One key driver of the softness in consumer confidence has been weak job security.”
Another factor at play is the Australian dollar. The AUD has been falling relative to the US dollar and it has had mixed results for the Australian economy. CommSec chief economist Craig James said that although the Australian economy is struggling, there shouldn’t be any new surprises in the short term. He also added that a weaker local currency might be weighing on consumer confidence. “While good for businesses, a weaker Aussie can lead to costlier overseas trips, costlier online purchases and potentially higher prices for a raft of consumer goods," Mr James said. The ANZ report showed that four out of the five broad subindices were in decline. The biggest decline came in the “time to buy a major household item” subindex which dropped 4.6 per cent to its lowest level since June 2014. Other indices showed significant decline in the ANZ report, including confidence is household finances next year, which fell 2.8 per cent, and the economic outlook over the next year, which fell 2.9 per cent.