Consumer confidence hits 30-year low

Omicron has hit consumer confidence hard as the index hit its lowest point since October 2020 at the height of the delta surge.

With testing facilities overwhelmed and people staying at home, the ANZ-Roy Morgan Consumer Confidence index fell 7.6 per cent last week, with all confidence subindices registering losses.

The “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.

The measure of “Current economic conditions” decreased by 7.6 per cent and future economic conditions softened at 3.9 per cent.

Shoppers are also putting off buying any big-ticket items with the “Time to buy a major household item” index declining 11.4 per cent, falling to its lowest since August 2020.

The only indices unchanged was the “Weekly inflation expectations” with its four-week moving average unchanged at 4.9 per cent.

ANZ head of Australian economics, David Plank, said confidence is now below the neutral level of 100 for all states.

“However, it is above neutral in the Territories on admittedly small samples,” he said.

“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.

“What really matters is the labour market conditions were very, very different [from now].”

Australia’s November jobless rate was 4.6 per cent, with the ABS scheduled to provide December figures on Thursday (20 January).

“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,” Mr Plank said.

Mr Plank said it remains unclear how long the effects of omicron will sap consumers’ urge to spend.

A separate ANZ report out on Thursday (20 January) showed there is no sign yet of a reversal in the “Omicron malaise in spending” with a decline of 27 per cent in the first half of January compared with the first half of December.