Australian consumer confidence down in response to Greek debt crisis

Consumer confidence fell by 4.6% (to 111.0) this week fuelled by continuing news around the Greek debt crisis and losses in global share markets, according to the latest ANZ-Roy Morgan Consumer Confidence Index.

The fall in consumer confidence, which had reversed the gains made in the previous two months in response to the Commonwealth Budget, has reflected the concerns consumers have about the impact of the Greek crisis on the global economy and Australia.

ANZ Chief Economist Warren Hogan said “Australians appear acutely aware of the threats posed to economic stability by both the Greek crisis and China’s equity market collapse.”

On the flipside, however, the Australian share market has recovered most of the trading losses of the previous two sessions as the All Ordinaries Index rose almost 2%, while the ASX 200 rose 106 points reported ABC Online.

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“While most of the decline in confidence in the past week is likely the result of international factors, it nevertheless reveals the underlying fragility in Australian household perceptions of the economic environment,” he said.

It revealed that consumer confidence in the economic outlook over the next year and the next 5 years has fallen by 8.2% and 2.9%, respectively - and that households’ views on ‘time to buy major household item’ also fell significantly by 8.1%.

This is supported by the latest data from St. George Bank which showed households are reverting back to a cautious approach, with less people drawing on their savings and more people using the low interest rates to pay off their debt quickly.

The proportion of Australian households saving ‘a lot’ is at its highest level since December 2013 following a 1.9% rise (to 8.2%) over the June quarter.

The data also revealed that in this low interest rate environment, Australians are improving their financial position by directing their savings towards property which was the only area of savings that reported an increase in current saving patterns (up by 1.6%).

“More and more households appear to have strong debt reduction and savings plans in place,”  said St George’s Head of Retail Banking for Outer Metro and Regional NSW, Neelam Tand