January consumer confidence at 30-year low as Omicron spread smashes spending outlook
A surge in Omicron cases has slashed spending intentions, with almost one in five Australians expecting to be ‘worse off’ financially this time next year.
Consumer confidence has slumped to its lowest level for the month of January in the past 30 years, as a surge in Omicron cases dashes spending intentions.
ANZ and Roy Morgan’s weekly index of consumer confidence fell by 7.6 per cent in the past seven days to its lowest overall level since October 2020.
But ANZ head of Australian economics David Plank said the result highlights that concerns about Covid-19 have the potential to impact the economy if they linger.
“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,” he said.
“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.”
The consumer confidence reading, which measures consumers’ feelings about current and future economic conditions, was below the neutral level of 100 at 97.9.
By region, consumer confidence is now below the neutral level of 100 in all states, but is above neutral in the territories.
All subindices registered losses, as the survey’s measure of “current financial conditions” dropped 11.3 per cent.
The outlook on “future financial conditions” fell 4.3 per cent, with 19 per cent of respondents expecting to be “worse off’ financially this time next year – the highest since September 2020.
Meanwhile, a separate ANZ survey revealed there are no signs of a recovery in spending among the bank’s customers.
Spending intentions in the first half of January slumped by 27 per cent, compared to the first half of December, with entertainment and travel the hardest hit sectors.
By contrast, previous years have seen 17-21 per cent declines over the same period.
ANZ senior economist Adelaide Timbrell said grocery purchases have improved and non-food retailing and dining has stayed somewhat stable at low levels through January.
More than 10 per cent of dining/takeaway expenditure took place online in the first half of January, compared to 4 per cent pre-Covid and 12-14 per cent during lockdown periods. Generally, the national seasonal decline over the festive period in dining spending is around 11-18 per cent, but this year it was 26 per cent.
Meanwhile, 25 per cent of the non-food retailing ANZ measured is now occurring online, which is a little higher than recent shares of online spending outside of lockdown conditions (20 per cent) but lower than the peak last year during Delta lockdowns (40 per cent).
Ms Timbrell said non-food retailing has also shifted down and online, but not as sharply as spending for other sectors.
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