Consumer Confidence sharp drop

Consumer confidence declined 7.6 per cent last week, dropping to its lowest level since October 2020, as Omicron surged across Australia and testing facilities came under immense strain.

All the confidence subindices registered losses. ‘Current financial conditions’ dropped 11.3 per cent and ‘future financial conditions’ fell 4.3 per cent, with 19 per cent of the respondents expecting to be ‘worse off’ financially this time next year – the highest since September 2020.

‘Current economic conditions’ decreased by 7.6 per cent and ‘future economic conditions’ softened 3.9 per cent.

‘Time to buy a major household item’ declined 11.4 per cent, falling to its lowest since August 2020. ‘Weekly inflation expectations’ and its four-week moving average was unchanged at 4.9 per cent.

“Consumer confidence dropped 7.6 per cent last week as Omicron case numbers surged.” ANZ Head of Australian Economics, David Plank said.

“Confidence is now below the neutral level of 100 for all states, though it is above neutral in the Territories (on admittedly small samples). It is also lower than the level during the Delta surge.”

“Consumer confidence readings are usually positive during the month of January and the level of 97.9 is the weakest January result since 1992, when the Australian economy was experiencing sharply rising unemployment. We don’t think the economy is as weak as these data might suggest, with the shock of the Omicron surge and strains on testing capability the key drivers of the fall rather than underlying economic conditions. But the result highlights that concerns about COVID have the potential to significantly impact the economy if they linger.”

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