Coronavirus denting consumer confidence; CommSec's Ryan Felsman

Coronavirus denting consumer confidence; CommSec's Ryan Felsman
Coronavirus denting consumer confidence; CommSec's Ryan Felsman

CommSec senior economist, Ryan Felsman, predicts that the RBA will cut interest rates in the coming months to support the economy.

Pressure was also building on the Federal government to announce significant fiscal initiatives in the May Budget, the analysis suggested.

It noted consumer confidence has dropped by 0.7 percent according to the weekly ANZ-Roy Morgan rating system, representing an eight-month low in public economic trust.

Falling to 108.3 points, sentiment remains below both the average of 114.1 points held since 2014, and the longer-term average of 113.1 points held since 1990.

Coronavirus denting consumer confidence; CommSec's Ryan Felsman

Three of the five major components of the index rose last week; Economic conditions over the next 12 months was up from -12.6 points to -10.5 points, economic conditions over the next 5 years was up from +1.3 points to +4.0 points, the measure of whether it was a good time to buy a major household item was up from +20.3 points to +22.4 points, and the measure of inflation expectations was up from 3.9 per cent to 4.1 per cent.

Coronavirus denting consumer confidence; CommSec's Ryan Felsman

Meanwhile, the estimate of family finances compared with a year ago was down from +8.6 points to +4.3 points, and the estimate of family finances over the next year was down from +27.7 points to +21.1 points.

Analysis by Mr Felsman suggests that Australia’s horrific fire-season over the Summer, and concerns among investors about to the growing threat of the Novel Coronavirus (COVID-19) epidemic outside of mainland China, are largely responsible for this downturn.

Coronavirus denting consumer confidence; CommSec's Ryan Felsman

CommSec's report notes that the Coronavirus’s cost to the Aussie economy is still largely unknown, however even minor reductions in Chinese demand for iron ore, coal, natural gas and agricultural produce could hurt Aussie exporters and producers.

The timing of the outbreak has raised particular concerns, due to its overlap with the current post-ceasefire recovery following the 2-year long US-China trade war.

Bloomberg has estimated that just 50-60 per cent of Chinese factories and businesses have reopened after the enforced extension to the Lunar New Year holiday break, however the Aussie dollar’s current weakness – at 11-year lows against the greenback – is acting as a ‘shock absorber’ for the national economy.

Coronavirus denting consumer confidence; CommSec's Ryan Felsman

 

Tags: 
Consumer Sentiment Coronavirus

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