Consumer confidence remains under a cloud in the face of ballooning inflation pressures, showing little reaction to Labor returning to government for the first time in nearly a decade.
The latest weekly ANZ-Roy Morgan consumer confidence survey captured the full response to the May 21 election, which has seen Labor secure 76 seats to form a majority government.
The consumer confidence index – a pointer to future household spending – was down 0.1 per cent at 90.7, well below its long-run average of 112.4 and indicating pessimists continue to outweigh optimists.
ANZ head of Australian economics David Plank said this muted reaction was not unusual, with little immediate reaction seen in response to the previous four elections.
“Confidence going into the 2022 election was, however, well below previous pre-election levels and it remains at a historically low level,” Mr Plank said.
Consumer inflation expectations rose 0.2 percentage points to 5.5 per cent, its highest level since April, which Mr Plank thought likely reflected the rise in petrol prices.
Wednesday’s national accounts for the March quarter are unlikely to lift the mood of Australians
Economists expect the report to show the economy slowed significantly in the quarter, faced with the impact of COVID-19 Omicron variant, floods along the east coast of Australia and rising inflation.
They will finalise their forecasts after the Australian Bureau of Statistics releases March quarter figures for company profits and inventories, and international trade on Tuesday.
At this stage, economists are forecasting quarterly growth of 0.5 per cent after disappointing business investment and construction data last week took the gloss off earlier upbeat household spending data.
That compares with a 3.4 per cent expansion in the December quarter as the economy recovered from the Delta variant disruption.
If correct, it would see the annual growth rate slow to 2.8 per cent compared with 4.2 per cent in the December quarter.
“The new government has inherited a difficult situation,” KPMG chief economist Brendan Rynne said.
“The momentum we saw in the domestic economy during the last quarter of 2021, has slowed, consistent with international experience across G7 economies which collectively shrunk in the March quarter.”
Among Tuesday’s data, company profits are forecast to rise by 4.5 per cent and business inventories – stock on shelves and in warehouses – are predicted to increase 0.7 per cent.
But net exports are expected to be a 1.4 percentage-point drag on the March quarter growth result.
Meanwhile, building approvals figures for April are expected to stabilise, with a 0.5 per cent rise after sharp double-digit swings in recent months.
