Despite strong employment numbers consumer confidence took a modest 0.3% dip last week, according to ANZ-Roy Morgan data. Household buying intentions slipped by 2.4% compared to a gain of 4.7% previously.
The news flow around the coronavirus and the potential implications for Chinese and Australian growth likely acted as a material offset to the more positive local news, ANZ head of Australian economics David Plank said.
“There are a number of unusual influences on sentiment at present, such as the bushfires and coronavirus and the offsetting impact of strength in the labour market. This makes it more difficult than usual to assess how consumer spending will respond. This difficulty will see the Reserve Bank opting to wait for more information before it considers a further reduction in the cash rate,” Plank said.
If further proof is needed that Australians confidence levels are in the doldrums a special report found that Australia is one of the least confident countries in the world about 2020.
A Roy Morgan survey conducted in Australia in conjunction with Gallup International world-wide revealed that only 12% of Australians, down 32% points on a year ago, expected 2020 would be a ‘better year’ than 2019 which is equal 43rd with South Korea of the 47 countries surveyed. Australia is more positive about 2020 than only three countries including Italy, Jordan and Lebanon.
Source: The Economist
Australia’s traditional allies the US and the UK fare significantly better with their views of 2020. A plurality of 43% of Americans said 2020 will be better than 2019 while a third of Britons expect 2020 will be better.
On a more positive note, Roy Morgan CEO Michele Levine said that although Australia has had a tough start to the year with devastating bushfires in much of the country there is plenty to look forward to as the bushfires recede and Australia goes back to work this week.
“A recent Roy Morgan survey of the effect of the bushfires on businesses showed that nearly three-quarters of Australian businesses haven’t been affected by the bushfires. Also, the two-year downturn in the property market has reversed and housing prices are again increasing while interest rates remain at record lows for the foreseeable future,” Levine said.
Australia’s growth profile has also been examined by the UK based Economist Intelligence Unit. The report said that while Australia is not usually included in quarterly growth forecast releases, the recent catastrophic bushfires led it to take a closer look at Australia’s growth profile.
It estimated that quarterly growth sank to just 0.1% in October-December, as a result of the slowdown in activity and the drop in sentiment that the bushfires have caused since they started in September. However it remained of the view that quarterly growth in Australia will rebound in the first quarter of 2020, to 0.4%, as the start of construction works lead to an increase in investment.
It is worth noting that the effects from the China coronavirus on global economies were not included in these reports.
The Economist Intelligence Unit provides political and economic analysis and forecasts for 197 countries.