Confidence for future low for business, consumers

Months of negative sentiment from ANZ consumer and business confidence surveys continued this week.

While consumers and businesses are optimistic about what is actually happening around them, their respective future outlooks remain pessimistic, a condition the Coalition Government has been unable to entirely shrug off.

Businesses were expecting a deterioration in conditions in their year ahead, while consumers' confidence slipped to below average levels and the "future conditions'' ANZ index is at its lowest since the end of 2015.

Tumbling business and consumer confidence has been a political football during the past year, prompting the Labour-led coalition to launch a PR offensive, appoint a Prime Minister's Business Advisory Group, and attack the credibility of the monthly ANZ confidence monitor, BusinessDesk reported.

Yesterday's ANZ Roy Morgan consumer confidence survey said perceptions of current conditions remained "very strong'', but perceptions of future conditions were at their lowest in almost three years, ANZ chief economist Sharon Zollner said.

"Consumers are feeling good about the here and now, but concerns about the future are clearly growing.

"Consumers haven't been this pessimistic about their own and their family's financial outlook one year ahead since mid-2012.''

The "current conditions'' index lifted 2 points to 122, but the "future conditions'' index fell 5 points to 111, the lowest level since September 2015.

Consumers' perceptions of their current financial situations dipped 1 point to a net 11% feeling financially better off than a year ago.

A net 20% expect to be better off financially this time next year, down 7 points.

However, Mrs Zollner said a net 33% say it is a good time to buy a major household item, bouncing back 4 points from last month's fall.

Perceptions regarding the next year's economic outlook fell 5 points to a net 1% expecting conditions to deteriorate, while the five-year outlook fell 4 points to +14%.

"A key question is whether this growing concern about the outlook will lead to consumers reining in their spending.''

However, encouragingly for retailers, the proportion of respondents who think it's a good time to buy a major household item increased and was at a level consistent with solid growth in spending, she said.

Earlier in the week, the ANZ's business confidence survey remained sour for October, with both headline sentiment and firms' views of their own activity largely unchanged from September.

The ANZ Bank still believes the Reserve Bank will eventually face pressure to cut interest rates.The official cash rate is at a low of 1.75%.

A net 37.1% of 367 firms surveyed in October's ANZ survey expect general business conditions to deteriorate in the coming 12 months, against a net 38.3% who expected a deterioration in September.

Agriculture was the most downbeat sector, then retail.

However, firms' views of their own activity, which is more strongly correlated with actual economic performance, remained positive, a net 7.4% predicting increased activity versus 7.8% in September, and the strongest intention to raise prices recorded since 2014: the survey found a net 32.2% of firms intended to raise prices, versus 30.2% in September.

Inflation expectations lifted slightly to 2.22% versus 2.12% in the previous month.

A net 3.3% of firms expected to reduce investment in the year ahead, an improvement on the net 9.2% tipping a reduction in the previous survey, Mrs Zollner said. - Additional reporting: BusinessDesk