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Confidence dips on North Korea tensions

Simone Ziaziaris  |  15 Aug 2017Text size  Decrease  Increase  |  

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SYDNEY - [AAP] Consumer confidence has fallen below its long-run average amid worries over North Korea and concerns over subdued wage growth.

The latest ANZ-Roy Morgan Consumer Confidence Index fell 1.8 per cent to 111.7 in the week to August 13, dipping below the long-term average of 112.9.

ANZ head of Australian economics David Plank said, after a period of recovery, consumer sentiment has been trending lower in recent weeks--most likely because of the war of words between the United States and North Korea.

US president Donald Trump last week refused to step back from his threat to hit North Korea "with fire and fury"--or to rule out a pre-emptive strike--if it continued to threaten the US, while North Korea responded with threats to land missiles near the US territory of Guam.

Mr Plank said three out of the five sub-indices posted declines, with consumers' sentiment towards current economic conditions down 6 per cent on the back of the prior week's decline of more than 10 per cent.

He said wage growth continues to weigh on consumer's minds on a broader scale, especially considering high debt levels of households and pressures from surging energy costs.

"It will be difficult for consumer confidence to sustain any material rise until we see a lift in wage growth," Mr Plank said.

He said wage price data, due out this week, is expected to show that wage growth remains subdued but could mimic first-quarter results that revealed a small acceleration.

"It is possible that this week's data could reveal a further small acceleration, which holds out the prospect of better news on the wages front over the coming year," he said.

Sentiment around future economic conditions was up marginally, just above the long-term average for the first time since March.

Meanwhile, attitudes towards current financial conditions fell two per cent, largely reversing the previous week's improvement, while views towards future financial conditions were up 1.9 per cent.

Inflation expectations for the week edged higher up to 4.6 per cent for a third consecutive week, but were unchanged on a four-week average basis.

 

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