Buyers have tightened their purse strings, and are holding onto their cash, an economic survey says. Photo: Unsplash/ The Nix Company
Consumer confidence has taken a knock and turned more pessimistic, despite falling interest rates and lower inflation, researchers say.
The ANZ-Roy Morgan survey showed a four point fall in confidence in October, to 91.2, after three months of improvement, which had measured confidence at the highest level in more than two years.
However, the latest survey showed consumers less confident about their current financial position and future outlook.
ANZ economist Henry Russell said a worsening labour market has given consumers a reality check.
"Employment prospects remain very weak and that's likely to weigh heavily on households as we see job security fears rise."
"So the cautious recovery we've seen over the past few months has come unstuck."
A net 22 percent of respondents said they were worse off financially than a year ago, an increase on the September survey, while a net 14 percent said they expected to be better off next year, compared to 25 percent last month.
Consumers were also slightly more pessimistic about the near term economic outlook, and less optimistic about the longer term prospects, and the appetite for buying a big ticket item remained negative.
Russell said falling interest rates and lower inflation would deliver benefits to consumers in due course as they trickle through to household budgets, but the likelihood of unemployment pushing through 5 percent would weigh on activity.
"There are things for consumers to look forward to, but it's going to be a tough six to nine months before we get there."