Confidence drops on RBA and trade

• Confidence fell by 2.1% last week, closing below its four-week moving average but remaining above the long-term average.

• Financial conditions were not the cause of the fall, with current finances up 2%, while future finances rose 1.4%.

• Economic conditions dropped sharply, however, with current economic conditions down a massive 8.1%, continuing their recent volatile pattern, and future economic conditions falling 3.3%.

• The ‘time to buy a household item’ also did not help, falling 2.5%. The four-week moving average for inflation expectations rose by 0.2ppt to 4.2%.

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ANZ Head of Australian Economics, David Plank, commented:

“The fall in consumer sentiment follows a couple of important developments. Domestically the RBA decided to leave interest rates unchanged after considerable speculation that a rate cut might occur. Globally, the US-China trade dispute resumed with the US increasing tariffs on a wide range of goods. At this stage, consumers see these events as more damaging for overall economic prospects than their own finances. After a period of weakness, inflation expectations jumped to 4.5% for the week, pushing the four week moving average to 4.2% – its highest level since the end of January. The uptrend in petrol prices over the last few weeks may have supported inflation expectations.” 

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