Consumers holding off from a big buy

Consumer confidence fell at the weekend as tax stimulus, lower interest rates and a turn in the housing market failed to motivate people to consider a major household purchase.

Conversely, the ANZ-Roy Morgan Australian Consumer Confidence index showed a modest bump in confidence towards the general economy, despite last week’s weak June quarter GDP figures.

The weekly measure of consumer mood, which is based on about 1,000 face-to-face interviews conducted on Saturdays and Sundays, fell 1.0 per cent from the previous week, weighed down by a sharp decline in confidence to buy a major household item, though sentiment toward the nation’s economic outlook improved.

ANZ head of Australian economics David Plank said it seemed consumers were keeping their wallets closed even after federal government tax cuts, improved property market conditions, and interest rate cuts in June and July.

Mr Plank also said it was slightly surprising to see confidence in the economy improve, given the the index had slumped to its lowest level in more than two years last week.

Year-on-year GDP growth also softened to just 1.4 per cent for the June Quarter, raising expectations the Reserve Bank will again cut its outlook.

“We need to be mindful that sentiment toward the current economic outlook had declined for five consecutive weeks,” Mr Plank said.

“So the bounce in this sub-index is only modest.”

AAP

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