A soft end to 2025 as short-term economic confidence takes a hit
The ANZ-Roy Morgan Consumer Confidence index has fallen to its lowest point in 15 months.
Describing the result as “a soft end to 2025”, the report showed that consumer confidence declined two points to 81.5 in the week ending 12 December, with the four-week moving average falling 0.7 points to 84.4.
The index is now six points lower than the start of the year, primarily driven by the ‘time to buy a major household item’ subindex. This subindex has dropped 9.7pts over the past fortnight, which ANZ economist Sophia Angala suggested may have been related to the conclusion of Black Friday sales.
‘Current financial conditions’ fell 1.6 points on the year-on-year basis, although ‘future finance conditions’ rose 0.4 points.
‘Short-term economic confidence’ over the next 12 months fell 3.1 points, while ‘medium-term economic confidence’ over the next five years dropped 1.7 points.
Angala suggested that recent concern around the risk of an interest rate hike in 2026, plus last week’s slightly soft labour market data, “may have driven the decline in household economic confidence”.
“Notably, the five-year economic outlook subindex has fallen to a new low in this cycle,” Angala added.
Westpac data underscores declining consumer sentiment
The Westpac-Melbourne Institute Consumer Sentiment Index, which also came out today, gave further proof of the increasingly cautiousness among Australian consumers.
It plunged 9% on a month-on-month basis to 94.5 this month, following a 12.8% upswing in November.
“After a surprising bounce in November – which resulted in the first ‘net positive’ reading since reopening from the pandemic – confidence has fallen back to around the levels that prevailed just prior,” noted Westpac economist Ryan Wells.
“The Index has jumped around in recent months, but it has finished the year broadly in ‘cautiously pessimistic’ territory.
“While this marks a clear improvement from the prolonged, deep pessimism that defined much of 2024, a sustained move into outright optimism remains elusive for the Australian consumer.”
The one-year outlook slid 9.7% to 94.6 and the five-year view fell 11.7% to 95.7. Household finances proved to be a drag, while the ‘time to buy a major household item’ index fell 11.4% to 98.9.
