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Consumer confidence usually rises in January, but not this year as sentiment is dented by the Omicron wave with unprecedented daily COVID case rates for Australia, workplaces and supply chains under strain due to infections, and far fewer financial supports available compared to previous waves.
A survey conducted by ANZ (ASX: ANZ) and Roy Morgan shows a sharp drop of 7.6 per cent in consumer confidence last week down to 97.9, representing its lowest level since October 2020.
This compares to a four week average of 105.1 and the monthly average of 112.4 since 1990.
Confidence around 'current financial conditions' fell 11.3 per cent but the drop was less pronounced for 'future financial conditions' at 4.3 per cent.
"Confidence is now below the neutral level of 100 for all states, though it is above neutral in the Territories (on admittedly small samples)," says ANZ head of Australian economics, David Plank.
"It is also lower than the level during the Delta surge. 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.
"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 willingness to buy a major household item was also down 11.4 per cent, falling to its lowest since August 2020. Meanwhile, 'weekly inflation expectations’ and its four-week moving average was unchanged at 4.9 per cent.
The figures released today contrast with the slight uptick in consumer confidence to 108.4 in the week before Christmas despite the Omicron wave, with ANZ senior economist Adelaide Timbrell positing at the time that the variant's lower hospitalisation rate compared to Delta probably helped.
But that was still below the US consumer confidence index of 115.8 in December, as calculated by The Conference Board, when there were increases in the proportion of consumers who were planning to purchase homes, automobiles, major appliances, and vacations over the next six months.
According to covid19data.com.au there are currently 695,674 active COVID cases in Australia, representing 2.7 per cent of the national population. At the time of writing only NSW and Victoria have reported their daily infection numbers today, at 29,830 and 20,180 respectively.
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